NOTICE
CITY OF CLOVIS, NEW MEXICO
$9,000,000*
Gross Receipts Tax Improvement Revenue Bonds,
Series 2012
The Preliminary Official Statement, dated September 14, 2012 (the "Preliminary Official Statement"),
relating to the above-described bonds (the "Bonds") of the City of Clovis, New Mexico (the "City"), has been
posted as a matter of convenience. The posted version of the Preliminary Official Statement has been
formatted in Adobe Portable Document Format (Adobe Acrobat 8.0). Although this format should replicate
the Preliminary Official Statement available from the City, appearance may vary for a number of reasons,
including electronic communication difficulties or particular user software or hardware. Using software other
than Adobe Acrobat 8.0 may cause the Preliminary Official Statement that you view or print to differ in
appearance from the Preliminary Official Statement.
The Preliminary Official Statement and the information contained therein are subject to completion or
amendment or other change without notice. Under no circumstances shall the Preliminary Official Statement
constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
For purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission, the
Preliminary Official Statement alone, and no other document or information on the internet, constitutes the
"Official Statement" that the City has deemed "final" as of its date in respect of the Bonds, except for certain
information permitted by Rule 15c2-12 to be omitted therefrom.
No person has been authorized to give any information or to make any representations other than
those contained in the Preliminary Official Statement in connection with the offer and sale of the Bonds and,
if given or made, such information or representations must not be relied upon as having been authorized. The
information and expressions of opinion in the Preliminary Official Statement are subject to change without
notice and neither the delivery of the Official Statement nor any sale made thereunder shall, under any
circumstances, create any implication that there has been no change in the affairs of the City since the date of
the Preliminary Official Statement.
By choosing to proceed and view the electronic version of the Preliminary Official Statement, you
acknowledge that you have read and understood this Notice.
*Preliminary, subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion and amendment. Under no circumstances shall the Preliminary Official Statement constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Preliminary Official Statement dated September 14, 2012.
NEW ISSUE – BANK QUALIFIED
MOODY’S RATINGS: "____";
See "RATINGS" herein.
In the opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Bond Counsel, under existing laws, regulations, rulings and
judicial decisions, and assuming compliance with certain covenants described in "TAX EXEMPTION" herein, interest on the Bonds
(including original issue discount treated as interest) (a) is excludable from the gross income of the recipients thereof; for federal
income tax purposes, (b) is not a specific preference item for purposes of the federal alternative minimum tax for individuals and
corporations, but such interest on the Bonds will be included in the adjusted current earnings of certain corporations, and (c) is
excludable from net income for purposes of certain New Mexico taxes imposed on individuals, estates, trusts and corporations. For a
more complete description of such opinion of Bond Counsel and a description of certain provisions of the Internal Revenue Code of
1986, as amended, which may affect the federal tax treatment of interest on the Bonds for certain owners of such bonds, see "TAX
EXEMPTION" herein.
CITY OF CLOVIS, NEW MEXICO
$9,000,000*
Gross Receipts Tax Improvement Revenue Bonds,
Series 2012
Book-Entry Only
Dated: Date of Delivery
Due: June 1, as shown on inside cover
The City of Clovis, New Mexico Gross Receipts Tax Improvement Revenue Bonds, Series 2012 (the "Bonds") are being
issued by the City of Clovis, Curry County, New Mexico (the "City") to provide funds for (1) acquiring, constructing, reconstructing,
resurfacing, maintaining, repairing or otherwise improving municipal streets, including storm drainage and sanitary sewer projects
directly related to a street project, and (2) paying expenses and costs of issuance related to the issuance of the Bonds. See "PURPOSE
AND PLAN OF FINANCING" herein. The Bonds are being issued pursuant to the general laws of the State, including Sections 3-311 to 3-31-12 NMSA 1978, as amended (the "Act"), and enactments of the City Commission relating to the issuance of the Bonds,
including the Bond Ordinance (as defined herein).
The Bonds are issuable only as fully registered bonds in denominations of $5,000 each or any integral multiple thereof. The
Bonds will bear interest from the delivery date and interest is payable on June 1 and December 1 of each year commencing June 1,
2013, as more fully described herein. The Paying Agent and Registrar is the City Treasurer, Clovis, New Mexico.
SEE MATURITY SCHEDULE SET FORTH ON THE INSIDE COVER OF THIS OFFICIAL STATEMENT.
The Bonds will be issued pursuant to a book-entry-only system and will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC") New York, New York. Purchasers of the Bonds ("Beneficial Owners") will not
receive physical delivery of bond certificates representing their beneficial ownership interests. So long as DTC or its nominee is the
owner of the Bonds, disbursement of payments of principal and interest to DTC is the responsibility of the Paying Agent,
disbursement of such payments to DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such
payments to Beneficial Owners is the responsibility of DTC Participants, as more fully described herein. See "DESCRIPTION OF
THE BONDS – Book-Entry Only System" herein.
The Bonds maturing on and after June 1, 2023 are subject to optional redemption on and after June 1, 2022, in whole or in
part at any time. See "DESCRIPTION OF THE BONDS – REDEMPTION OF BONDS" herein.
The Bonds are offered when, as and if issued by the City, subject to the approval of validity by Modrall, Sperling, Roehl,
Harris & Sisk, P.A., Albuquerque, New Mexico, Bond Counsel, and certain other conditions. Certain legal matters will be passed on
for the City by David F. Richards, Esquire, City Attorney. Modrall, Sperling, Roehl, Harris & Sisk, P.A., has also acted as special
counsel to the City in connection with the preparation of this Official Statement and the sale of the Bonds. It is anticipated that the
Bonds will be available for delivery on or about October 3, 2012 through the facilities of DTC, New York, New York.
Electronic and/or sealed bids will be opened at 11:00 AM, prevailing Mountain Time, September 20, 2012
at the offices of RBC Capital Markets, LLC, 6301 Uptown Boulevard N.E., Suite 110, Albuquerque, New Mexico 87110.
Dated: September 20, 2012
*Preliminary, subject to change.
MATURITY SCHEDULE SERIES 2012 BONDS
Maturity
(June 1)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Principal
Amount
$1,260,000
1,225,000
1,270,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
405,000
Interest
Rate
Price
CUSIP
Number
Electronic and/or sealed bids will be opened at 11:00 AM,
prevailing Mountain Time, September 20, 2012
at the offices of RBC Capital Markets, LLC, 6301 Uptown Boulevard N.E., Suite 110, Albuquerque,
New Mexico 87110.
CITY OF CLOVIS, NEW MEXICO
321 North Connelly
Clovis, New Mexico 88101
(575) 541-2000
MAYOR
David Lansford
CITY COMMISSION
Chris Bryant, Commissioner, District 4
Randy Crowder, Commissioner, District 1
Juan F. Garza, Commissioner, District 1
Fidel Madrid, Commissioner, District 3
Robert Sandoval, Commissioner, District 3
Dan Stoddard, Commissioner, District 4
Sandra Taylor-Sawyer, Commissioner, District 2
Len Vohs, Commissioner, Commissioner, District 2 and Mayor Pro-Tem
CITY ADMINISTRATION
Joe Thomas, City Manager
LeighAnn Melancon, Finance Director, City Treasurer and City Clerk
Donald E. Clifton, Director of Budget and Internal Operations
CITY ATTORNEY
David F. Richards
FINANCIAL ADVISOR
RBC Capital Markets, LLC
6301 Uptown Boulevard, N.E., Suite 110
Albuquerque, New Mexico 87110
(505) 872-5999
BOND COUNSEL
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
500 Fourth Street N.W., Suite 1000
P.O. Box 2168 (87103-2168)
Albuquerque, New Mexico 87102
(505) 848-1800
PAYING AGENT AND REGISTRAR
LeighAnn Melancon, City Treasurer, City of Clovis
321 N. Connelly
Clovis, New Mexico 88101
USE OF INFORMATION IN THIS OFFICIAL STATEMENT
No dealer, salesman or other person has been authorized by the City of Clovis, New Mexico (the
"City") to give any information or to make any statements or representations, other than those contained in
this Official Statement, and, if given or made, such other information, statements or representations must not
be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or
solicitation of an offer to buy any of the Bonds in any jurisdiction in which such offer or solicitation is not
authorized, or in which any person making such offer or solicitation is not qualified to do so, or to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction. The information set forth or
included in this Official Statement has been provided by the City and from other sources believed by the City
to be reliable. The information and expressions of opinion herein are subject to change without notice, and
neither the delivery of this Official Statement nor any sale hereunder shall create any implication that there
has been no change in the financial condition or operations of the City described herein since the date hereof.
This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements
of fact, and no representation or warranty is made as to the correctness of such estimates and opinions or that
they will be realized.
The Bonds have not been registered under the Securities Act of 1933 in reliance upon exemptions
contained in such Act. The registration and qualification of the Bonds in accordance with applicable
provisions of the securities law of the states in which the Bonds have registered or qualified and the
exemption from registration or qualification in other states cannot be regarded as a recommendation thereof.
Neither the Securities and Exchange Commission nor any other federal, state, municipal or other
governmental entity, nor any agency or department thereof, has passed upon the merits of the Bonds or the
accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal
offense.
This Official Statement is "deemed final" by the City for purposes of Rule 15c2-12 promulgated by
the Securities and Exchange Commission. The City has covenanted to provide such annual financial
statements and other information in the manner as may be required by regulations of the Securities and
Exchange Commission or other regulatory body.
This Official Statement contains statements that are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words "estimate,"
"project," "intend," "expect" and similar expressions are intended to identify forward-looking statements.
Such statements are subject to risks and uncertainties that could cause actual results to differ materially from
those contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Copies of the Bond Ordinance authorizing the issuance of the Bonds are available upon request at the
office of the City Clerk, City Hall, 321 North Connelly, Clovis, New Mexico.
TABLE OF CONTENTS
INTRODUCTION .........................................................................................................................................................1
THE ROAD/FACILITY IMPROVEMENT PROJECT ................................................................................................2
SPECIAL FACTORS RELATING TO THE BONDS..................................................................................................2
GROSS RECEIPTS TAX COLLECTIONS ARE SUBJECT TO FLUCTUATION .................................................... 2
BANKRUPTCY AND FORECLOSURE............................................................................................................ 3
LIMITED OBLIGATIONS ............................................................................................................................. 3
ADDITIONAL PARITY OBLIGATIONS ......................................................................................................... 3
SECONDARY MARKET ............................................................................................................................... 3
STATE LEGISLATION ................................................................................................................................. 3
CITY CANNOT INCREASE DISTRIBUTION OF TAXES.................................................................................. 4
BOND RATINGS ......................................................................................................................................... 4
DESCRIPTION OF THE BONDS ................................................................................................................................4
GENERAL ................................................................................................................................................... 4
PAYMENT - REGULAR RECORD DATE ....................................................................................................... 5
OPTIONAL REDEMPTION ........................................................................................................................... 5
REDEMPTION PROCEDURES....................................................................................................................... 5
CONDITIONAL REDEMPTION ..................................................................................................................... 6
REGISTRATION, TRANSFER AND EXCHANGE OF BONDS ........................................................................... 6
BOOK-ENTRY ONLY .................................................................................................................................. 7
SOURCE OF PAYMENT ............................................................................................................................... 9
FUNDS AND ACCOUNTS........................................................................................................................... 10
DISPOSITION OF BOND PROCEEDS .......................................................................................................... 10
DEPOSIT OF PLEDGED REVENUES AND FLOW OF FUNDS. ....................................................................... 10
GENERAL ADMINISTRATION OF FUNDS .................................................................................................. 13
DEFAULT, REMEDIES AND CITY DUTIES ................................................................................................. 13
DEFEASANCE ........................................................................................................................................... 14
AMENDMENT ........................................................................................................................................... 14
SECURITY FOR THE BONDS..................................................................................................................................15
PLEDGE AND SECURITY........................................................................................................................... 15
SPECIAL LIMITED OBLIGATIONS ............................................................................................................. 15
PURPOSE AND PLAN OF FINANCING..................................................................................................................16
PURPOSE .................................................................................................................................................. 16
SOURCES AND USES OF FUNDS ............................................................................................................... 16
ANNUAL DEBT SERVICE SUMMARY..................................................................................................................16
PLEDGED REVENUES .............................................................................................................................................18
OTHER GROSS RECEIPTS TAXES (NOT PLEDGED) ................................................................................... 19
GROSS RECEIPTS REPORTED BY STANDARD INDUSTRIAL CLASSIFICATION .......................................... 20
HISTORICAL TOTAL GROSS RECEIPTS REPORTED FOR CITY, COUNTY AND STATE ............................... 21
HISTORICAL TAXABLE GROSS RECEIPTS REPORTED FOR CITY AND STATE .......................................... 21
ADDITIONAL OBLIGATIONS PAYABLE FROM PLEDGED REVENUES ........................................................21
STATE SHARED GROSS RECEIPTS TAX PARITY OBLIGATIONS ............................................................... 21
REFUNDING BONDS ................................................................................................................................. 22
CITY COVENANTS IN THE BOND ORDINANCE ................................................................................................23
THE CITY ...................................................................................................................................................................25
GENERAL ................................................................................................................................................. 25
GOVERNMENT ......................................................................................................................................... 25
ADMINISTRATIVE OFFICERS ................................................................................................................... 25
i
TABLE OF CONTENTS
OTHER EMPLOYEES................................................................................................................................. 25
PUBLIC EMPLOYEE RETIREMENT ASSOCIATION ..................................................................................... 25
NEW MEXICO RETIREE HEALTH CARE AUTHORITY ............................................................................... 26
CITY BUDGETS ........................................................................................................................................ 27
INDUSTRY ................................................................................................................................................ 28
EDUCATION ............................................................................................................................................. 28
AGRICULTURE ......................................................................................................................................... 28
TRANSPORTATION ................................................................................................................................... 28
LABOR FORCE AND PERCENT UNEMPLOYED .......................................................................................... 29
MAJOR EMPLOYERS ................................................................................................................................ 31
PER CAPITA INCOME ............................................................................................................................... 31
EFFECTIVE BUYING INCOME ................................................................................................................... 31
AGE DISTRIBUTION ................................................................................................................................. 32
POPULATION............................................................................................................................................ 32
BUILDING PERMITS AND ASSESSED VALUATIONS .................................................................................. 33
HISTORICAL GENERAL FUND BALANCE SHEET ...................................................................................... 34
HISTORICAL GENERAL FUND REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES............ 35
OTHER CITY OBLIGATIONS ..................................................................................................................... 36
LITIGATION AND INSURANCE .............................................................................................................................37
FINANCIAL ADVISOR .............................................................................................................................................37
TRANSCRIPT AND CLOSING STATEMENTS ......................................................................................................37
TAX EXEMPTION.....................................................................................................................................................38
GENERAL ................................................................................................................................................. 38
INTERNAL REVENUE SERVICE AUDIT PROGRAM .................................................................................... 39
ORIGINAL ISSUE DISCOUNT .................................................................................................................... 39
ORIGINAL ISSUE PREMIUM...................................................................................................................... 40
FINANCIAL STATEMENTS.....................................................................................................................................40
LEGAL MATTERS ....................................................................................................................................................40
RATINGS....................................................................................................................................................................40
CONTINUING DISCLOSURE...................................................................................................................................40
ADDITIONAL INFORMATION ...............................................................................................................................41
OFFICIAL STATEMENT CERTIFICATION............................................................................................................42
APPENDIX A EXCERPTS FROM AUDITED FINANCIAL STATEMENTS OF THE CITY OF CLOVIS,
NEW MEXICO FOR THE YEAR ENDING JUNE 30, 2010 ................................................................................. A-1
APPENDIX B FORM OF BOND COUNSEL OPINION........................................................................................B-1
APPENDIX C NOTICE OF SALE ..........................................................................................................................C-1
APPENDIX D CONTINUING DISCLOSURE AGREEMENT……………………………………… …………..D-1
ii
CITY OF CLOVIS, NEW MEXICO
$9,000,000*
Gross Receipts Tax Improvement Revenue Bonds,
Series 2012
SUMMARY OF INFORMATION
There follows a summary of certain provisions discussed in this Official Statement. SUCH
SUMMARY DOES NOT PURPORT TO BE COMPREHENSIVE OR DEFINITIVE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE OFFICIAL STATEMENT. This Summary is
only a brief statement and a full review of the entire Official Statement should be made by potential investors.
Issuer:
The City of Clovis, New Mexico (the "City") The City is a political subdivision
of the State of New Mexico (the "State"), organized and existing under the
Constitution and laws of the State. The City is the county seat of Curry County,
New Mexico. The City was incorporated in 1909, operates under a home rule
charter originally adopted in 1971 and last amended in 2004. The City operates
under a Commission - Manager form of government under its home rule charter
with the Mayor having limited duties. The City is located in the east central
portion of the State near the New Mexico - Texas border. The City has an
estimated 2010 census population of 37,775.
Dated:
Date of Delivery.
Principal Payment:
The Bonds are registered bonds maturing on June 1 of the years set forth on the
inside cover page of this Official Statement.
Interest Payment:
Interest will be payable semiannually on June 1 and December 1, commencing
June 1, 2013.
Purpose:
The City of Clovis, New Mexico Gross Receipts Tax Improvement Revenue
Bonds, Series 2012 (the "Bonds") are being issued by the City of Clovis, Curry
County, New Mexico (the "City") to provide funds to (1) finance the cost of
acquiring, constructing, reconstructing, resurfacing, maintaining, repairing, or
otherwise improving municipal streets, including storm drainage and sanitary
sewer projects directly related to a street project and (2) pay expenses and costs
of issuance related to the issuance of the Bonds. See "PURPOSE AND PLAN
OF FINANCING" herein.
Authorization:
The Bonds are being issued pursuant to the general laws of the State, including
Sections 3-31-1 to 3-31-12 NMSA 1978, as amended (the "Act"), the Charter
and enactments of the City Council relating to the issuance of the Bonds,
including the Bond Ordinance.
Security:
The Bonds are special limited obligations payable solely from and secured by an
irrevocable and first lien (but not necessarily an exclusive first lien) upon the
revenues of the 1.225% state shared gross receipts tax (the "Pledged
Revenues"). See "SECURITY FOR THE BONDS" herein.
Special Obligations:
THE PRINCIPAL OF AND INTEREST ON THE BONDS WILL BE
PAYABLE SOLELY FROM PLEDGED REVENUES, AND WILL NOT BE
*Preliminary, subject to change.
PAYABLE FROM ANY FUNDS OF THE CITY EXCEPT THE
DESIGNATED SPECIAL FUNDS PLEDGED TO THE PAYMENT OF THE
BONDS. THE BONDS WILL NOT CONSTITUTE AN INDEBTEDNESS
NOR A DEBT OF THE CITY WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION NOR
WILL THEY BE CONSIDERED OR HELD TO BE GENERAL
OBLIGATIONS OF THE CITY. NEITHER THE FULL FAITH AND
CREDIT NOR THE GENERAL TAXING POWER OF THE CITY IS
PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST
ON THE BONDS, AND NO OWNER HAS THE RIGHT TO COMPEL THE
EXERCISE OF THE TAXING POWER OF THE CITY OR THE
FORFEITURE OF ANY OF ITS PROPERTY IN CONNECTION WITH ANY
DEFAULT UNDER THE BOND ORDINANCE.
Reserve Fund:
No deposit to the Reserve Fund will be made from the proceeds of the Bonds.
No deposit shall be required in the Reserve Fund so long as the Pledged
Revenues in each Fiscal Year equal or exceed 200% of the maximum annual
principal and interest coming due in any subsequent Fiscal Year on all
outstanding Parity Bonds. If the Pledged Revenues in any Fiscal Year are
insufficient to meet the test set forth in the preceding sentence, the City shall
begin making substantially equal monthly deposits in the Reserve Fund from the
first legally available Pledged Revenues so that after 24 months an amount
equal to the Minimum Reserve will be held in the Reserve Fund.
Minimum Reserve:
The Minimum Reserve, if required, shall be an amount equal to the least of (i)
ten percent of the principal amount of the outstanding Bonds, (ii) the maximum
annual debt service on the outstanding Bonds, or (iii) 125% of the average
annual debt service on the outstanding Bonds. The Minimum Reserve shall be
recalculated every year on or about June 1.
Optional Prior
Redemption:
Parity Obligations:
The Bonds maturing on and after June 1, 2023 are subject to prior redemption at
par at the option of the City, in one or more units of principal of $5,000 on and
after June 1, 2022. If the Bonds are optionally redeemed in part, the Bonds to
be so redeemed shall be selected by lot by the Registrar in such manner as the
Registrar shall consider appropriate and fair. The redemption price will be the
principal amount of each $5,000 unit so redeemed, accrued interest thereon to
the redemption date.
The City has outstanding the following obligations with a parity lien on the
Pledged Revenues: (i) the “City of Clovis, New Mexico Gross Receipts Tax
Revenue Bonds, Series 2005” issued in the original aggregate principal amount
of $3,580,000 and authorized by City Ordinance No. 1808-2005 adopted by the
City Commission on March 3, 2005, (ii) the “City of Clovis, New Mexico Gross
Receipts Tax Revenue Bonds, Series 2010” issued in the original aggregate
principal amount of $7,000,000 and authorized by City Ordinance No. 19342010 adopted by the City Commission on August 19, 2010, (iii) the City of
Clovis, New Mexico Gross Receipts Tax Improvement and Refunding Revenue
Bonds, Series 2011A” issued in the original aggregate principal amount of
3,527,000 and authorized by City Ordinance No. 1962-2011 adopted by the City
Commission on June 16, 2011, and (iv) the “City of Clovis, New Mexico Gross
Receipts Tax Improvement Revenue Bonds, Taxable Series 2011B” issued in
the original aggregate principal amount of $2,877,000 and authorized by City
Ordinance No. 1962-2011 adopted by the City Commission on June 16, 2011.
Additional Bonds:
In addition to the Bonds, additional bonds may hereafter be issued and secured
by and paid from the Pledged Revenues on parity with the Bonds. The City will
not issue additional bonds payable from the Pledged Revenues with a lien prior
and superior to the lien of the Bonds thereon. Nothing contained in the Bond
Ordinance will be construed in such a manner as to prevent the issuance by the
City of additional bonds payable from the Pledged Revenues with a lien thereon
subordinate and junior to the lien of the Bonds thereon, nor to prevent the
issuance of bonds or other obligations refunding all or part of the Bonds as
permitted by the Bond Ordinance.
Tax Exemption:
In the opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Bond Counsel,
under existing laws, regulations, rulings and judicial decisions, and assuming
compliance with certain covenants in the documents relating to the Bonds and
requirements of the Internal Revenue Code of 1986, as amended (the "Code"),
interest on the Bonds is excludable from the gross income of the recipients
thereof for federal income tax purposes and is not a specific preference item for
purposes of the alternative minimum tax for individuals, estates, trusts and
corporations, but such interest on the Bonds will be included in the adjusted
current earnings of certain corporations, and is excludable from net income for
purposes of certain New Mexico taxes imposed on individuals, estates, trusts
and corporations. For a more complete description of such opinion of Bond
Counsel and a description of certain provisions of the Internal Revenue Code of
1986, as amended, which may affect the federal tax treatment of interest on the
Bonds for certain owners of such bonds, see "TAX EXEMPTION" herein.
Qualified Tax Exempt
Obligations:
Secondary Market
Disclosure:
The Bonds are designated as "qualified tax-exempt obligations" for purposes of
Section 265(b)(3) of the Code. The City has no "subordinate entities" with
authority to issue tax-exempt obligations within the meaning of that Section of
the Code. In that connection, the Commission covenants that the Commission
in or during the calendar year in which the Bonds are issued, (i) will not
designate as "qualified tax-exempt obligations" for the purposes of Section
265(b)(3) of the Code tax-exempt obligations, including the Bonds, in an
aggregate principal amount in excess of ten million dollars and (ii) will not issue
tax-exempt obligations within the meaning of Section 265(b)(4) of the Code,
including the Bonds and any qualified 501(c)(3) bonds as defined in Section 145
of the Code (but excluding obligations, other than qualified 501(c)(3) bonds,
that are private activity bonds as defined in Section 141 of the Code), in an
aggregate principal amount exceeding ten million dollars.
The City has entered into an undertaking (the "Undertaking") for the benefit of
the holders of the Bonds to send certain financial information and operating data
to certain information repositories annually and to provide notice to the
Municipal Securities Rulemaking Board of certain events, pursuant to the
requirements of Section (b)(5)(i) of Securities and Exchange Commission Rule
15c2-12 (17 C.F.R. Part 240, 240.15c2-12). See "CONTINUING
DISCLOSURE" herein.
Delivery:
The delivery of the Bonds is expected on or about October 3, 2012.
Bond Counsel:
Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, New Mexico
Paying Agent/Registrar:
City Treasurer, Clovis, New Mexico.
OFFICIAL STATEMENT
CITY OF CLOVIS, NEW MEXICO
$9,000,000*
Gross Receipts Tax Improvement Revenue Bonds,
Series 2012
INTRODUCTION
This Official Statement, which includes the cover page and the appendices hereto, sets forth certain
information in connection with the offering of $9,000,000* aggregate principal amount of Gross Receipts Tax
Improvement Revenue Bonds, Series 2012 (the "Bonds") to be issued by the City of Clovis, Curry County,
New Mexico, pursuant to Ordinance No. 1985-2012 adopted on August 16, 2012, as supplemented by
Resolution No. ___ adopted by the City Commission on September 20, 2012 (collectively, the "Bond
Ordinance").
The Bonds are payable and collectible solely from the Pledged State Shared Gross Receipts Tax
Revenues ("Pledged Revenues").
Pledged Revenues means the revenues from the State gross receipts tax derived pursuant to Section 79-4 NMSA 1978, imposed on persons engaging in business in the State, which revenues are remitted to the
City monthly by the New Mexico Department of Taxation and Revenue pursuant to Section 7-1-6 and 7-1-6.4
NMSA 1978, and which remittances currently equal one and two hundred twenty-five thousandths percent
(1.225%) of the taxable gross receipts reported for the City for the month for which such remittances is made;
provided that if a greater amount of such gross receipts tax revenues are hereafter provided to be remitted to
the City under applicable law, such additional amounts shall be included as revenues pledged pursuant to the
Bond Ordinance; and provided further that the amount of revenues pledged pursuant to the Bond Ordinance
shall never be less than the greater of: (i) 1.225% of the taxable gross receipts remitted to the City by the State
as set forth above, or (ii) the maximum amount at any time provided hereafter to be remitted to the City under
applicable law, and includes the distribution to the City made pursuant to Section 7-1-6.46 NMSA 1978, as
that distribution relates to the gross receipts tax revenues received pursuant to Section 7-1-6.4 NMSA 1978,
which revenues are reduced pursuant to the deductions under Sections 7-9-92 and 7-9-93 NMSA 1978; and
provided further, the City intends that Section 3-31-6(C) NMSA 1978 applies expressly to the amount of
revenues pledged pursuant to the Bond Ordinance (the term "Pledged Revenues" does not include any local
option gross receipts tax income received by the City).
The Bonds will be secured by an irrevocable and first lien (but not necessarily an exclusive first lien)
on the Pledged Revenues. See "SECURITY FOR THE BONDS" herein.
The Bonds are being issued by the City of Clovis, Curry County, New Mexico (the "City") to provide
funds to (1) acquire, construct, reconstruct, resurface, maintain, repair, or otherwise improve municipal
streets, including storm drainage and sanitary sewer projects directly related to a street project; and (2) pay
expenses and costs of issuance related to the issuance of the Bonds. See "THE STREET IMPROVEMENT
PROJECT" herein
Pursuant to the Bond Ordinance, the City has covenanted not to repeal or amend any law, ordinance,
or resolution in a manner that impairs any of the outstanding Bonds.
*Preliminary, subject to change.
Additional bonds may hereafter be issued and secured by the Pledged Revenues having a lien on the
Pledged Revenues on a parity with, or subordinate and junior to, the lien on the Pledged Revenues securing
the Bonds. Additional Obligations may not be issued with a lien superior to the lien on the Pledged Revenues
securing the Bonds. See "ADDITIONAL OBLIGATIONS PAYABLE FROM PLEDGED STATE SHARED
GROSS RECEIPTS TAX REVENUES -- Parity Obligations" herein.
The descriptions and summaries of various documents hereinafter set forth do not purport to be
comprehensive or definitive, and reference is made to each document for the complete details of all terms and
conditions. All statements herein are qualified in their entirety by reference to each document. All
capitalized terms used in this Official Statement and not otherwise defined herein have the same meanings as
in the Bond Ordinance.
THE STREET IMPROVEMENT PROJECT
The proceeds of the Bonds will be used to (1) acquire, construct, reconstruct, resurface, maintain,
repair, or otherwise improve municipal streets, including storm drainage and sanitary sewer projects directly
related to a street project and (2) pay expenses and costs of issuance related to the issuance of the Bonds. See
"SOURCES AND USES OF PROCEEDS OF THE BONDS" herein.
SPECIAL FACTORS RELATING TO THE BONDS
The purchase of the Bonds involves special risks and the Bonds may not be appropriate investments
for all types of investors. Each prospective investor is encouraged to read this Official Statement in its
entirety and to give particular attention to the factors described below, which, among other factors discussed
herein, could affect the payment of debt service on the Bonds and could affect the market price of the Bonds
to an extent that cannot be determined at this time. The Bonds may not be suitable investments for all persons,
and prospective purchasers should evaluate the risks and merits of an investment in the Bonds, and should
confer with their own legal and financial advisors before deciding to purchase the Bonds.
Gross Receipts Tax Collections are Subject to Fluctuation
Gross receipts tax collections are subject to the fluctuations in spending related, in part, to national
and local economic conditions, which influence the amount of gross receipts taxes collected. This causes
gross receipts tax revenues to increase along with the increasing prices brought about by inflation, but also
causes collections to be vulnerable to adverse economic conditions and reduced spending. The City's
economic base and the future collections of Pledged Revenues are directly affected by economic activities in
the City. The City's retail sales are affected by general economic circumstances.
The Pledged Revenues are based on the total gross receipts of the City. Various circumstances and
developments, most of which are beyond the control of the City, may have an adverse effect on the future
level of Pledged Revenues. Such circumstances may include, among others, adverse changes in national and
local economic and financial conditions generally, reductions in the rates of employment and economic
growth in the City, the State and the region, a decrease in rates of population growth and rates of residential
and commercial development in the City, the County, the State and the region and various other factors. For
the Fiscal Year ended June 30, 2012, total Pledged Revenues (unaudited) were $9,593,916, approximately 2%
higher than for the previous fiscal year.
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Bankruptcy and Foreclosure
The ability and willingness of an owner or operator of a business to pay gross receipts taxes may be
adversely affected by the filing of a bankruptcy proceeding by the owner. The ability to collect delinquent
gross receipts taxes using foreclosure and sale for non-payment of taxes may be forestalled or delayed by
bankruptcy, reorganization, insolvency or other similar proceedings affecting the owner or operator of a
business. The Federal bankruptcy laws provide for an automatic stay of foreclosure and sale proceedings,
thereby delaying such proceedings, perhaps for an extended period. Delays in the exercise of remedies could
result in gross receipts tax collections that may be insufficient to pay debt service on Bonds when due.
Limited Obligations
The Bonds constitute a lien only on the Pledged Revenues. Therefore, the security for the punctual
payment of the principal of and interest on the Bonds is dependent on the City's receipt of the Pledged
Revenues in amounts sufficient to meet the debt service requirements of the Bonds. See "SECURITY FOR
THE BONDS" and "PLEDGED REVENUES" herein. The Bonds and the interest thereon do not constitute a
debt or indebtedness of the City within the meaning of any provision or limitation of the Constitution or laws
of the State and do not give rise to a pecuniary liability of the City or a charge against its general credit or
taxing power. Further, the Bonds are not obligations of the State, and the owners of the Bonds may not look
to the State for payment of the principal of or interest on the Bonds.
Additional Parity Obligations
The City may issue additional Parity Obligations without Bondholder consent, upon meeting
coverage or other financial tests. See "ADDITIONAL OBLIGATIONS PAYABLE FROM PLEDGED
STATE SHARED GROSS RECEIPTS TAX REVENUES -- Parity Obligations" herein. Parity Obligations
would have a lien on the Pledged Revenues on parity with the lien of the Bonds. As a result, if Pledged
Revenues are insufficient to pay debt service on the Bonds and the Parity Obligations in any year, debt service
will be paid on a proportionate basis.
Secondary Market
Although the Underwriter expects to maintain a secondary market in the Bonds, at this time no
guarantee can be made that a secondary market for the Bonds will be maintained by the Underwriter or others.
Owners of the Bonds should be prepared to hold their Bonds to maturity or prior redemption.
State Legislation
The State Legislature of the State of New Mexico (the "Legislature") may amend the laws relating to
the levy, calculation and/or the distribution of or otherwise impacting the City’s gross receipts tax revenues.
In some cases, the Legislature has made amendments which negatively impacted the amount of gross receipts
tax revenues received by local government.
In 2004, the Legislature adopted legislation creating a deduction from gross receipts tax for receipts
from retail sales of food (not including restaurant sales and certain sales of prepared foods) as defined for
federal food stamp program purposes. Retailers are required to report receipts from sales of such groceries
and then claim the deduction. The statute provides for payments to be made from the State general fund to
reimburse local governments for revenues lost as a result of the new deduction. Those distributions are
included within Pledged Revenues.
In addition, in 2004 the Legislature created a deduction from gross receipts tax for receipts of licensed
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medical care providers from Medicare Part C and managed health plans that by contract do not reimburse
providers for gross receipts tax. This legislation includes provision for payments from the State general fund
to reimburse local governments for revenues lost as a result of this deduction. Those distributions are
included within Pledged Revenues.
Other amendments to State laws affecting taxed activities and distribution of gross receipts tax
revenues have been proposed from time to time and could be proposed in the future by the Legislature. There
is no assurance that any future amendments will not adversely affect activities now subject to the gross
receipts tax or distribution of gross receipts tax revenues to the City. Notwithstanding the foregoing, the
provisions of State law authorizing the issuance of revenue bonds (including gross receipts tax bonds such as
the Bonds) include a provision stating that any law which authorizes the pledge of revenues to the payment of
revenue bonds, or which affects the pledged revenue "shall not be repealed or amended or otherwise directly
or indirectly modified in such a manner as to impair adversely any such outstanding revenue bonds."
City Cannot Increase Distribution of Taxes
The City has no control over the rate at which the Pledged Revenues are distributed to the City; the
rate of distribution can be increased only by action of the Legislature. Although it is possible that the
Legislature will increase the rate of distribution to the City, there is currently no legislation proposed or
pending to increase the rate of distribution to the City.
Bond Ratings
There is no assurance that the ratings assigned to the Bonds will not be lowered or withdrawn at any
time, the effect of which could adversely affect the market price or the marketability of the Bonds. See the
information herein under the caption "RATINGS."
DESCRIPTION OF THE BONDS
General
The Bonds are being issued in the aggregate principal amount of $9,000,000* in order to provide
funds for the Street Improvement Project. See "PURPOSE AND PLAN OF FINANCING" herein.
The Bonds will be dated the date of delivery. The Bonds will bear interest from their dated date at the
rates, and will mature in the amounts and on the dates set forth on the inside cover page of this Official
Statement. Interest on the Bonds will be payable semi-annually on June 1 and December 1 of each year,
commencing June 1, 2013. The Bonds will bear interest from the most recent interest payment date to which
interest has been fully paid or duly provided for or, if no interest has been paid, from the date of issuance.
The Bonds will be issued as fully registered bonds without coupons in denominations of $5,000 or any
integral multiple thereof.
*Preliminary, subject to change.
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Payment - Regular Record Date
The principal of and any prior redemption premium applicable to any Bond shall be payable to the
Owner thereof as shown on the registration books kept by the Registrar (which is appointed as registrar and
transfer agent for the Bonds), upon maturity or prior redemption thereof and upon presentation and surrender
at office of the Paying Agent (which is appointed as paying agent for the Bonds). If any Bond shall not be
paid upon such presentation and surrender at or after maturity or on a designated prior redemption date on
which the City may have exercised its right to prior redeem any Bond pursuant to the Bond Ordinance, it shall
continue to draw interest at the rate borne by the Bond until the principal thereof is paid in full. Payment of
interest on any Bond shall be made to the registered owner thereof as of the Regular Record Date by check or
draft mailed by the Paying Agent, on or before each interest payment date (or, if such interest payment date is
not a business day, on or before the next succeeding business day without accruing any additional interest), to
the Owner thereof on the Regular Record Date at such Owner’s address as it last appears on the registration
books kept by the Registrar on the Regular Record Date (or by such other arrangement as may be mutually
agreed to by the Paying Agent and any registered owner on such Regular Record Date). All such payments
shall be made in lawful money of the United States of America. The person in whose name any Bond is
registered at the close of business on any Regular Record Date with respect to any interest payment date shall
be entitled to receive the interest payable thereon on such interest payment date notwithstanding any transfer
or exchange thereof subsequent to such Regular Record Date and prior to such interest payment date; but any
such interest not so timely paid or duly provided for shall cease to be payable as provided above and shall be
payable to the person in whose name any Bond is registered at the close of business on a Special Record Date
fixed by the Paying Agent for the payment of any such defaulted interest. Such Special Record Date shall be
fixed by the Paying Agent whenever moneys become available for defaulted interest, and notice of any such
Special Record Date shall be given not less than ten days prior thereto, by first-class mail, to the Owners of
the Bonds as of a date selected by the Paying Agent, stating the Special Record Date and the date fixed for the
payment of such defaulted interest.
Optional Redemption
The Bonds maturing on or after June 1, 2023 are subject to prior redemption at the City's option in
one or more units of principal of $5,000 on and after June 1, 2022 in whole or in part at any time, in such
order of maturities as the City may determine (and by lot if less than all Bonds of such maturity is called, such
selection by lot to be made by the Registrar in such manner as considered appropriate and fair) for the
principal amount of each $5,000 unit of principal so redeemed plus accrued interest to the redemption date.
Redemption shall be made upon prior notice mailed to each registered owner of each Bond selected for
redemption as shown on the registration books kept by the Registrar in the manner and upon the conditions
provided in the Bond Ordinance.
Redemption Procedures
Notice of redemption shall be given by the Registrar by sending a copy of such notice in the manner
required by the Depository or by first-class, postage prepaid mail at least thirty (30) days prior to the
redemption date to the registered owner of each Bond, or portion thereof, to be redeemed at the address
shown as of the close of business of the Registrar on the fifth day prior to the mailing of notice on the
registration books kept by the Registrar. The City shall give notice of optional redemption of the Bonds to the
Registrar at least forty-five (45) days prior to the redemption date (unless such deadline is waived by the
Registrar). The Registrar's failure to give such notice to the registered owner of any Bond, or any defect
therein, shall not affect the validity of the proceedings for the redemption of any Bonds for which proper
notice was given. Notices of redemption shall specify the maturity dates and the number or numbers of the
Bonds to be redeemed (if less than all are to be redeemed) and if less than the full amount of any Bond is to
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be redeemed, the amount of such Bond to be redeemed, the date fixed for redemption, and that on such
redemption date there will become and be due and payable upon each Bond to be redeemed at the office of the
Paying Agent the principal amount to be redeemed plus accrued interest to the redemption date and that from
and after such date interest will cease to accrue on such amount. Notice having been given in the manner
hereinbefore provided, the Bond or Bonds so called for redemption shall become due and payable on the
redemption date so designated and if an amount of money sufficient to redeem all Bonds called for
redemption shall on the redemption date be on deposit with the Paying Agent, the Bonds to be redeemed shall
be deemed not outstanding and shall cease to bear interest from and after such redemption date. Upon
presentation of the Bonds to be redeemed at the office of the Paying Agent, the Paying Agent will pay the
Bond or Bonds so called for redemption with funds deposited with the Paying Agent by the City.
Conditional Redemption
If money or Federal Securities sufficient to pay the optional redemption price of the Bonds to be
called for optional redemption are not on deposit with the Paying Agent prior to the giving of notice of
optional redemption pursuant to paragraph (c) of this Section, such notice shall state such Bonds will be
redeemed in whole or in part on the optional redemption date in a principal amount equal to that part of the
optional redemption price received by the Paying Agent by 2:00 p.m. on the applicable optional redemption
date. If the full amount of the optional redemption price is not received as set forth in the preceding sentence,
the notice shall be effective only for those Bonds for which the optional redemption price is on deposit with
the Paying Agent. If all Bonds called for optional redemption cannot be redeemed, the Bonds to be redeemed
shall be selected in a manner deemed reasonable and fair by the City and the Registrar shall give notice, in the
manner in which the original notice of optional redemption was given, that such money was not received. In
that event, the Registrar shall promptly return to the Owners thereof the Bonds or certificates which it has
received evidencing the part thereof which have not been redeemed.
Registration, Transfer and Exchange of Bonds
Books for the registration and transfer of the Bonds shall be kept by the Registrar. Upon the
surrender for transfer of any Bonds at the office of the Registrar, duly endorsed for transfer or accompanied
by an assignment duly executed by the Owner or his attorney duly authorized in writing, the Registrar shall
authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of a like aggregate
principal amount and of the same maturity, bearing a number or numbers not contemporaneously outstanding.
Bonds may be exchanged at office of the Registrar for an equal aggregate principal amount of Bonds of the
same maturity of other authorized denominations. The Registrar shall authenticate and deliver a Bond or
Bonds that the Owner making the exchange is entitled to receive, bearing a number or numbers not
contemporaneously outstanding. Exchanges and transfers of Bonds as herein provided shall be without
charge to the Owner or any transferee, but the Registrar may require the payment by the Owner of any Bond
requesting exchange or transfer of any tax or other governmental charge required to be paid with respect to
such exchange or transfer.
The Registrar shall not be required: (i) to transfer or exchange all or a portion of any Bond subject to
prior redemption during the period of 15 days next preceding the mailing of notice to the Owners calling any
Bonds for prior redemption pursuant to Section 7; or (ii) to transfer or exchange all or a portion of a Bond
after the mailing to registered owners of notice calling such Bond or portion thereof for prior redemption.
The person in whose name any Bond shall be registered on the registration books kept by the
Registrar shall be deemed and regarded as the absolute owner thereof for the purpose of making payment
thereof and for all other purposes except as may otherwise be provided with respect to payment of interest as
is provided in Section 6(B), and payment of or on account of either principal or interest on any Bond shall be
made only to or upon the written order of the Owner thereof or the Owner’s legal representative, but such
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registration may be changed upon transfer of such Bond in the manner and subject to the conditions and
limitations provided herein. All such payments shall be valid and effectual to discharge the liability upon
such Bond to the extent of the sum or sums so paid.
If any Bond is lost, stolen, destroyed or mutilated, the Registrar shall, upon receipt of such evidence,
information or indemnity relating thereto as it may reasonably require, authenticate and deliver a replacement
Bond or Bonds of a like aggregate principal amount and of the same maturity, bearing a number or numbers
not contemporaneously outstanding. If such lost, stolen, destroyed or mutilated Bond has matured, the Paying
Agent may pay such Bond in lieu of replacement.
Book-Entry Only
Introduction
Unless otherwise noted, the information contained under the caption "General" below has been
provided by DTC. The City makes no representations as to the accuracy or the completeness of such
information. The Beneficial Owners of the Bonds should confirm the following information with DTC, the
Direct Participants or the Indirect Participants.
NEITHER THE CITY NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR
OBLIGATION TO DIRECT PARTICIPANTS, TO INDIRECT PARTICIPANTS, OR TO ANY
BENEFICIAL OWNER WITH RESPECT TO (A) THE ACCURACY OF ANY RECORDS MAINTAINED
BY DTC, ANY DIRECT PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (B) ANY NOTICE THAT
IS PERMITTED OR REQUIRED TO BE GIVEN TO THE OWNERS OF THE BONDS UNDER THE
BOND ORDINANCE, (C) THE SELECTION BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT
PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL
REDEMPTION OF THE BONDS; (D) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR
INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR INTEREST
DUE TO THE OWNER OF THE BONDS; (E) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY
DTC AS THE OWNERS OF BONDS; OR (F) ANY OTHER MATTER REGARDING DTC.
General
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the
Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee) or such other name as may be requested by an authorized representative of DTC. One
fully-registered Bond certificate will be issued for the Bonds, in the aggregate principal amount of such issue,
and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of
U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from
over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the
post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities, through electronic computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include
both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
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Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation
and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the
users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through
or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to Direct
Participants are on file with the Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com and www.dtc.org. The City undertakes no responsibility for and makes no
representations as to the accuracy or the completeness of the content of such material contained on that
website as described in the preceding sentence including, but not limited to, updates of such information or
links to other Internet sites accessed through the aforementioned website.
Purchases of the Bonds under the DTC system must be made by or through Direct or Indirect
Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each
actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase.
Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to
be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in
the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered
in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an
authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede
& Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge
of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and
Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be
in effect from time to time.
While the Bonds are in the book-entry only system, redemption notices will be sent to DTC. If less
than all of the Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the
Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the
Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede &
Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to
credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from
the City or agent on payable date in accordance with their respective holdings shown on DTC's records.
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Payments by Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of DTC, agent, or the City, subject to
any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption
proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by
an authorized representative of DTC) is the responsibility of the City or agent, disbursement of such payments
to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by
giving reasonable notice to the City. Under such circumstances, in the event that a successor depository is not
obtained, certificates representing the Bonds are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, certificates representing the Bonds will be printed and
delivered to DTC.
This information concerning DTC and DTC's book-entry system has been obtained from sources that
the City believes to be reliable, but neither the City nor the Underwriter takes any responsibility for the
accuracy thereof.
Source of Payment
The Bonds are payable and collectible solely from an irrevocable and first lien (but not necessarily an
exclusive first lien) on the Pledged Revenues. "Pledged Revenues" means the revenues from the State gross
receipts tax derived pursuant to Section 7-9-4 NMSA 1978, imposed on persons engaging in business in the
State, which revenues are remitted to the City monthly by the New Mexico Department of Taxation and
Revenue pursuant to Section 7-1-6 and 7-1-6.4 NMSA 1978, and which remittances currently equal one and
two hundred twenty-five thousandths percent (1.225%) of the taxable gross receipts reported for the City for
the month for which such remittances is made; provided that if a greater amount of such gross receipts tax
revenues are hereafter provided to be remitted to the City under applicable law, such additional amounts shall
be included as revenues pledged pursuant to the Bond Ordinance; and provided further that the amount of
revenues pledged pursuant to the Bond Ordinance shall never be less than the greater of: (i) 1.225% of the
taxable gross receipts remitted to the City by the State as set forth above, or (ii) the maximum amount at any
time provided hereafter to be remitted to the City under applicable law, and includes the distribution to the
City made pursuant to Section 7-1-6.46 NMSA 1978, as that distribution relates to the gross receipts tax
revenues received pursuant to Section 7-1-6.4 NMSA 1978, which revenues are reduced pursuant to the
deductions under Sections 7-9-92 and 7-9-93 NMSA 1978; and provided further, the City intends that Section
3-31-6(C) NMSA 1978 applies expressly to the amount of revenues pledged pursuant to the Bond Ordinance
(the term "Pledged Revenues" does not include any local option gross receipts tax income received by the
City).
All of the Bonds, together with the interest accruing thereon, shall be payable and collectible solely
out of Pledged Revenues, which are irrevocably so pledged by the applicable Bond Ordinance. The registered
owner or owners of the Bonds may not look to any general or other fund for the payment of the principal of or
interest on such obligations, except the designated special funds pledged therefor. The Bonds shall not
constitute an indebtedness or a debt within the meaning of any constitutional or statutory provision or
limitation; nor shall they be considered or held to be general obligations of the City.
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Funds and Accounts
The Bond Ordinance creates or continues the following funds and accounts for the Bonds: an
Acquisition Account, a State Shared Gross Receipts Tax Income Fund, a Series 2012 Bond Fund, and a Series
2012 Reserve Fund;
Disposition of Bond Proceeds
The proceeds from the sale of the Bonds shall be applied by the City simultaneously with the delivery
of the Bonds to the Purchaser in the following manner and priority:
Expenses. An amount necessary, together with other legally available funds of the City, shall
be used to pay costs of issuance of the Bonds.
Acquisition Account. All remaining proceeds derived from the sale of the Bonds shall be
deposited promptly upon the receipt thereof in the Acquisition Account. Until the Completion Date, the
money in the Acquisition Account shall be used and paid out solely for the purpose of the Street Improvement
Project in compliance with applicable law.
Series 2012 Reserve Fund. No deposit of proceeds of the Bonds or other City moneys into
the Series 2012 Reserve Fund shall be required on the date of issuance of the Bonds or at any time thereafter,
except in the circumstances and on the conditions described in the Bond Ordinance.
Street Improvement Project Completion. As soon as practicable, after the completion of the
Street Improvement Project, and in any event not more than 60 days after the completion of the Street
Improvement Project, any balance remaining in the Acquisition Account (other than any amount retained by
the City for any Street Improvement Project costs not then due and payable) shall be transferred from the
Acquisition Account and deposited in the Series 2012 Bond Fund and used by the City to pay principal and
interest on the Bonds as same become due.
Deposit of Pledged Revenues and Flow of Funds.
A.
The Bonds and Pledged Revenues.
(1)
State Shared Gross Receipts Tax Income Fund. So long as any of the Bonds are
outstanding either as to principal or interest, or both, the City shall credit all Pledged Revenues to the State
Shared Gross Receipts Tax Income Fund. The following payments shall be made from the State Shared
Gross Receipts Tax Income Fund.
(2)
Series 2012 Bond Fund. As a first charge on the State-Shared Gross Receipts Tax
Income Fund, the following amounts shall be withdrawn from the State-Shared Gross Receipts Tax Income
Fund and shall be credited to the Series 2012 Bond Fund:
(a)
Monthly, commencing on the first day of the month immediately succeeding the
delivery of the Bonds, an amount in equal monthly installments necessary, together with any other moneys
therein and available therefor, to pay the next maturing installment of interest on the Bonds, and monthly
thereafter, commencing on each Interest Payment Date, one-sixth (1/6th) of the amount necessary to pay the
next maturing installment of interest on the Bonds then outstanding.
(b)
Monthly, commencing on the first day of the month immediately succeeding the
delivery of the Bonds, an amount in equal monthly installments necessary, together with any other moneys
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therein and available therefor, to pay the next maturing installment of principal of the outstanding Bonds and
monthly thereafter, commencing on each principal payment date, one twelfth (1/12th) of the amount
necessary to pay the next maturing installment of principal on the Bonds then outstanding.
(3)
Credit. In making the deposits required to be made into the Series 2012 Bond Fund,
if there are any amounts then on deposit in the Series 2012 Bond Fund available for the purpose for which
such deposit is to be made, the amount of the deposit to be made pursuant to paragraph (2) above shall be
reduced by the amount available in such fund for such purpose.
(4)
Transfer of Money out of Series 2012 Bond Fund. Each payment of principal and
interest becoming due on the Bonds shall be transferred from the Series 2012 Bond Fund to the Paying Agent
on or before two Business Days prior to the due date of such payment.
(5)
Series 2012 Reserve Fund. The Treasurer (or successor) of the City, on or before the
150th day after the close of each Fiscal Year, shall deliver a certificate stating the ratio of coverage of Pledged
Revenues to the combined maximum annual principal and interest coming due in any subsequent Fiscal Year
on the outstanding Bonds and other Parity Obligations (the "Debt Service Coverage Ratio"); and if such
certificate indicates that the Pledged Revenues for such Fiscal Year are less than 2.0 times the maximum
annual principal and interest requirements in any subsequent Fiscal Year on the Bonds and any Parity
Obligations then outstanding, or if there occurs an event of default under the Ordinance as to any principal or
interest payment obligation, the City shall immediately proceed to accumulate the Reserve Requirement in the
Series 2012 Reserve Fund by 12 substantially equal monthly deposits made on the first day of each month
commencing on the first day of the first month concurrently following such determination and such
accumulations shall be made from the Pledged Revenues, second to the payments required by paragraph 2 of
this Section and concurrently with the payment (if any) into the reserve fund for other Parity Obligations.
After the funding of the Series 2012 Reserve Fund as aforesaid, if such certificates for two consecutive Fiscal
Years indicate that the Debt Service Coverage Ratio for two consecutive Fiscal Years is at least 2.0 of the
maximum annual principal and interest coming due in any subsequent Fiscal Year on the outstanding Bonds
and other Parity Obligations, any money or securities in the Series 2012 Reserve Fund may be transferred to
other City funds or accounts, and the procedure provided in the first sentence of this paragraph 5 shall be
reinstated. The amounts in the Series 2012 Reserve Fund are pledged exclusively as additional security for
payment of the principal of and interest on the Bonds and this Ordinance creates a lien thereon. After
accumulation of the Reserve Requirement, second to the payments required by paragraph 2 hereof, there shall
be credited monthly to the Series 2012 Reserve Fund from the Income Fund, such amount or amounts, if any,
as are necessary to maintain the Series 2012 Reserve Fund as a continuing reserve in an amount not less than
the Reserve Requirement to meet possible deficiencies in the Series 2012 Bond Fund. The moneys (if any) in
the Series 2012 Reserve Fund shall be accumulated and maintained as a continuing reserve to be used, except
as hereinafter provided in paragraphs 6 and 8 of this Section, only to prevent deficiencies in the payment of
the principal of and interest on the Bonds resulting from the failure to credit to the Series 2012 Bond Fund
sufficient funds to pay the principal and interest as the same become due. Amounts (if any) in the Series 2012
Reserve Fund in excess of the Reserve Requirement shall be withdrawn from the Series 2012 Reserve Fund
and deposited into the Series 2012 Bond Fund (including investment income therefrom) and shall be used to
pay the principal of or interest on the Bonds or any obligations refunding the Bonds. Also, second to the
payments required by paragraph 2 of this Section and coequal and on a parity with payments into the Series
2012 Reserve Fund, there may be credited on a periodic basis of not more frequently than monthly, an amount
necessary to establish, maintain or reestablish reasonable reserve funds for additional Parity Obligations or
necessary to reimburse a credit facility provider for amounts due in connection with a draw on any debt
service reserve surety bond or similar credit facility for any such additional Parity Obligations.
(6)
Defraying Delinquencies in the Series 2012 Bond Fund and Series 2012 Reserve
Fund. If, in any month, the City shall, for any reason, fail to pay into the Series 2012 Bond Fund the full
11
amount required, then an amount shall be paid into the Series 2012 Bond Fund on such date from the Series
2012 Reserve Fund (if moneys are then on deposit in the Series 2012 Reserve Fund) equal to the difference
between the amount paid from the Pledged Revenues and the full amount so stipulated. If the moneys paid
into the Series 2012 Bond Fund from the Series 2012 Reserve Fund are not equal to the amount required to be
paid into the Series 2012 Bond Fund on such date, then in the following month, an amount equal to the
difference between the amount paid and the amount required shall be deposited into the Series 2012 Bond
Fund, from the first Pledged Revenues thereafter received and not required to be otherwise applied. The
money deposited in the Series 2012 Bond Fund from the Series 2012 Reserve Fund, if any, shall be replaced
in the Series 2012 Reserve Fund from the first Pledged Revenues thereafter received and not required to be
otherwise applied. If, in any month, the City shall, for any reason, fail to pay into the Series 2012 Reserve
Fund the full amount required, the difference between the amount paid and the amount so stipulated shall in a
like manner be paid therein from the first Pledged Revenues thereafter received and not required to be
otherwise applied. The moneys in the Series 2012 Reserve Fund shall be used solely and only for the purpose
of paying any deficiencies in the payment of the principal of and the interest on the Bonds; provided,
however, that any moneys at any time in excess of the Reserve Requirement in the Series 2012 Reserve Fund
may be withdrawn therefrom and applied to any other lawful purpose.
(7)
Payment of Parity Obligations. Concurrently with the payment of the Pledged
Revenues required by paragraphs (2) and (6) of this Section, any amounts on deposit in the State-Shared
Gross Receipts Tax Income Fund shall be used by the City for the payment of principal of, interest on and
debt service reserve fund deposits relating to Parity Obligations, payable from the Pledged Revenues, as the
same accrue. If funds on deposit in the State-Shared Gross Receipts Tax Income Fund are not sufficient to
pay when due the required payments of principal of, interest on and debt service reserve fund deposits relating
to the Bonds and any other outstanding Parity Obligations, then the available and applicable funds in the
State-Shared Gross Receipts Tax Income Fund will be used, first, on a pro rata basis, based on the amount of
principal and interest then due with respect to each series of outstanding Parity Obligations, for the payment
of principal of and interest on all series of outstanding Parity Obligations and, second, to the extent of
remaining available funds in the State-Shared Gross Receipts Tax Income Fund, on a pro rata basis, based on
the amount of debt service reserve fund deposits then required with respect to each series of outstanding
Parity Obligations, for the required debt service reserve fund deposits for all series of outstanding Parity
Obligations.
(8)
Termination Upon Deposits to Maturity. No payment shall be made into the Series
2012 Bond Fund or the Series 2012 Reserve Fund if the amount in such fund totals a sum at least equal to the
entire aggregate amount due as to principal, premium, if any, and interest, on the Bonds to their respective
maturities or applicable redemption dates, in which case moneys in the Series 2012 Bond Fund in an amount
at least equal to such respective principal and interest requirements shall be used solely to pay such
obligations as the same accrue, and any moneys in excess thereof in the Series 2012 Bond Fund may be used
as provided below.
(9)
Payment for Subordinate Obligations. Subsequent to the payments required by
paragraphs (2), (5), and (6) of this Section, any balance remaining in the State-Shared Gross Receipts Tax
Income Fund, after making the payments hereinabove provided, shall be used by the City for the payment of
interest on and the principal of additional obligations, if any, hereafter authorized to be issued and payable
from the Pledged Revenues with a lien on the Pledged Revenues junior or subordinate to the lien thereon of
the Bonds (provided that such payments may be made at any intervals as may be provided in the ordinance or
resolution authorizing such additional obligations).
(10)
Payment from Other Sources. Notwithstanding any other provisions of this
Ordinance, the City may, in its sole discretion, choose to apply other legally available funds, such as its .25%
municipal gross receipts tax, to the payment of the Bonds.
12
(11)
Surplus Revenues. After making all the payments hereinabove required to be made
by this Section, the remaining Pledged Revenues, if any, may be applied to any other lawful purpose, as the
City may from time to time determine.
General Administration of Funds
The funds designated above shall be administered and invested as follows:
A.
Places and Times of Deposits. The funds shall be separately maintained as a trust fund or
funds for the purposes established and shall be deposited in one or more bank accounts in an Insured Bank or
Banks. Each fund or account shall be continuously secured to the extent required by law and shall be
irrevocable and not withdrawable by anyone for any purpose other than the designated purpose. Payments
shall be made into the proper fund or account on the first day of the month except when the first day shall not
be a Business Day, then payment shall be made on the next succeeding Business Day. No later than two
Business Days prior to each Interest Payment Date, moneys sufficient to pay interest and principal then due
on the Bonds shall be transferred to the Paying Agent. Nothing in the Bond Ordinance shall prevent the City
from establishing one or more bank accounts in an Insured Bank or Banks for all the funds required by the
Bond Ordinance or shall prevent the combination of such funds and accounts with any other bank account or
accounts or investments for other funds and accounts of the City.
Default, Remedies and City Duties
Each of the following events is declared in the Bond Ordinance to be an "event of default":
(a)
Nonpayment of Principal. Any payment of the principal of any of the Bonds is not made
when due and payable, either at maturity, by proceedings for prior redemption, or otherwise.
(b)
Nonpayment of Interest. Any payment of any installment of interest on the Bonds is not
made when the same becomes due and payable or within 30 days thereafter.
(c)
Default of any Provision. Any failure by the City to observe or perform any covenant,
condition or agreement on its part to be observed or performed (other than as referred to in Section 28(A) or
Section 28(B)), which failure continues for a period of 60 days after written notice specifying the failure and
requesting that it be remedied has been given to the City by the Owners of 25% in principal amount of the
Bonds then Outstanding.
(d)
Bankruptcy or Insolvency of City. (1) The City shall (a) apply for or consent to the
appointment of or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of the City
or of all or a substantial part of its property, (b) commence a voluntary case under the Federal Bankruptcy
Code, or (c) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, or
reorganization or (2) a proceeding or case shall be commenced, without application or consent of the City, in
any court of competent jurisdiction seeking (a) the liquidation, reorganization, dissolution, winding-up or
adjustment of debts of the City, (b) appointment of a trustee, receiver, custodian, liquidator or the like of the
City or of all or a substantial part of its assets, or (c) similar relief in respect of the City under any law relating
to bankruptcy, insolvency, reorganization, winding-up or adjustment of debts.
Upon the occurrence and during the continuance of any Event of Default, the Owners of not less than
25% in principal amount of the Bonds then Outstanding, including but not limited to a trustee or trustees
therefor, may proceed against the City, the Commission, and its agents, officers and employees to protect and
enforce the rights of any Owner under the Ordinance by mandamus or other suit, action or special
13
proceedings in equity or at law, in any court of competent jurisdiction, either for specific performance of any
covenant or agreement contained herein or in an award or execution of any power herein granted for the
enforcement of any power, legal or equitable remedy as such Owners may deem most effectual to protect and
enforce the rights aforesaid, or thereby to enjoin any act or thing which may be unlawful or in violation of any
right of any registered owner, or to require the Commission to act as if it were the trustee of an express trust,
or any combination of such remedies. All such proceedings at law or in equity shall be instituted, had and
maintained for the equal benefit of all Owners of the Bonds then Outstanding. The failure of any Owner so to
proceed shall not relieve the City or any of its officers, agents or employees of any liability for failure to
perform any duty. Each right or privilege or any Owner (or trustee thereof) is in addition and cumulative to
any other right or privilege, and the exercise of any right or privilege by or on behalf of any Owner shall not
be deemed a waiver of any other right or privilege thereof.
Upon the occurrence and during the continuance of any Event of Default, the City shall do and
perform all proper acts on behalf of and for the Owners to protect and preserve the security created for the
payment of the principal of and interest on the Bonds promptly as the same become due. In the event the City
fails or refuses to proceed as provided in the Bond Ordinance, the registered Owners of not less than 25% in
principal amount of the Bonds then Outstanding, after demand in writing, may proceed to protect and enforce
the rights of the Owners as provided in the Bond Ordinance.
Defeasance
When all principal, any applicable prior redemption premium, and interest in connection with the
Bonds have been duly paid, the pledge and lien and all obligations hereunder shall thereby be discharged and
the Bonds shall no longer be deemed to be Outstanding within the meaning of the Bond Ordinance. There
shall be deemed to be such due payment as to any Bond when the Commission has placed in escrow and in
trust with a commercial bank located within or without the State and exercising trust powers, an amount
sufficient (including the known minimum yield from Federal Securities in which such amount may initially be
invested) to meet all requirements of principal, interest and any applicable prior redemption premium as the
same become due to its maturity or designated redemption date as of which the City shall have exercised or
obligated itself to exercise its option to call such Bond. The Federal Securities shall become due prior to the
respective times on which the proceeds thereof shall be needed, in accordance with a schedule established and
agreed upon between the Commission and such bank at the time of the creation of the escrow or the Federal
Securities shall be subject to the redemption at the option of the holders thereof to assure such availability as
so needed to meet such schedule. Federal Securities within the meaning of this section shall include only
direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by
the United States of America and which are not callable prior to maturity by the issuer of such obligations.
Amendment
The Bond Ordinance may be amended by an amendatory or supplemental ordinance or resolution
without the consent of the holder of any Bond to cure any ambiguity, or to cure, correct or supplement any
defect or inconsistent provision contained therein, to add to the covenants and agreements in the Bond
Ordinance for the protection or benefit of the Owners, to subject to the Bond Ordinance additional revenues,
properties or collateral, to comply with the provisions of the Code, or to comply with any rule or regulation of
the Securities and Exchange Commission relating to the Bonds. Except as provided above, the Bond
Ordinance may be amended or supplemented by ordinance or resolution adopted by the Commission in
accordance with the laws of the State, without receipt by the City of any additional consideration but with the
written consent of the Owners of 75% of the Bonds Outstanding at the time of the adoption of such
amendatory or supplemental ordinance or resolution; provided, however, that no such ordinance (without the
consent of the registered owners of all of the Bonds authorized by the Bond Ordinance and outstanding at the
14
time of adoption of such amendatory or supplemental ordinance or resolution) shall have the effect of
permitting:
(a)
An extension of the maturity of any Bond; or
(b)
A reduction in the principal amount of any Bond, the rate of interest thereon or the prior
redemption premium due in connection therewith; or
(c)
The creation of a lien upon or pledge of Pledged Revenues ranking prior to the lien or pledge
created by the Bond Ordinance; or
(d)
A reduction of the principal amount of Bonds required for consent to such amendatory or
supplemental ordinance; or
(e)
The establishment of priorities as between Bonds issued and outstanding under the
provisions of the Bond Ordinance; or
(f)
The modification of or otherwise affecting the rights of the registered owners of less than all
of the Bonds then outstanding.
Notwithstanding the foregoing, prior to the issuance of the Bonds, the Bond Ordinance may be
amended by resolution of the City Commission to cure, correct or supplement any defect or inconsistent
provision contained therein.
SECURITY FOR THE BONDS
Pledge and Security
Subject to the uses permitted by, and the priorities set forth in the Bond Ordinance, the City will
pledge and grant a security interest in the Pledged Revenues and the amounts and securities on deposit in the
Series 2012 Bond Fund and the Series 2012 Reserve Fund and the proceeds thereof, for the payment of
principal of and interest on the Bonds. The Bonds constitute an irrevocable and first lien, but not necessarily
an exclusive first lien, on the Pledged Revenues, as set forth in the Bond Ordinance.
Special Limited Obligations
All of the Bonds and all payments of principal, premium, if any, and interest thereon whether at
maturity or on a redemption date, together with any interest accruing thereon, shall be special limited
obligations of the City and shall be payable and collectible solely from the Pledged Revenues. The owner or
owners of the Bonds may not look to any general or other fund for the payment of the principal of or interest
on such obligations, except the designated special funds pledged therefor. The Bonds shall not constitute a
indebtedness or a debt of the City within the meaning of any constitutional, charter or statutory provision or
limitation, nor shall they be considered or held to be general obligations of the City. Each of the Bonds shall
recite that it is payable and collectible solely out of the Pledged Revenues as set forth in the Bond Ordinance,
and that the holders thereof may not look to any general or other municipal fund for the payment of the
principal of and interest on the Bonds. Nothing herein shall prevent the City from applying other funds of the
City legally available therefor to the payment of the Bonds, in its sole discretion.
15
PURPOSE AND PLAN OF FINANCING
Purpose
The net proceeds received by the City from the sale of the Bonds, together with other available funds
of the City, will be used to provide funds for the construction of Street Improvements. See "THE STREET
IMPROVEMENT PROJECT" herein.
Sources and Uses of Funds
The sources and uses for the Bonds are as follows:
Sources of Funds
Par Amount of Bonds
$_____________
Premium
$_____________
TOTAL SOURCES
$_____________
Uses of Funds
Deposit to Acquisition Account
$_____________
Costs of Issuance for Bonds(1)
$_____________
TOTAL USES
$_____________
(1)
Includes financial advisor fees, legal fees and other miscellaneous costs and
contingencies.
ANNUAL DEBT SERVICE SUMMARY
The following table sets forth for each fiscal year from 2013 through 2027 the amounts required in
each such fiscal year to pay scheduled annual debt service on the Bonds and outstanding Parity Obligations,
as well as the debt service coverage ratio, based on fiscal year 2012 Pledged Revenues.
16
Series 2012 Bonds
Debt Service/Coverage*
Year Ending
June 30
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
(1)
(2)
Debt Service
on Outstanding
Parity Obligations
$ 1,212,106
1,210,764
1,209,041
1,211,930
1,219,020
1,217,356
1,216,128
1,218,235
1,216,428
1,217,961
1,222,807
1,226,372
1,229,396
969,876
975,803
980,253
982,247
984,766
469,637
Estimated
Debt Service
on Bonds*
$ 1,496,250
1,495,900
1,498,025
623,575
608,175
592,775
577,375
561,975
546,575
531,175
515,775
500,375
484,975
469,575
419,175
Total Debt
Service*
2,708,356
2,706,664
2,707,066
1,835,505
1,827,195
1,810,131
1,793,503
1,780,210
1,763,003
1,749,136
1,738,582
1,726,747
1,714,371
1,439,451
1,394,978
980,253
982,247
984,766
469,637
Estimated
Pledged
Revenues (1)
$ 9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
9,593,916
Debt Service
Coverage(2)
3.54
3.54
3.54
5.23
5.25
5.30
5.35
5.39
5.44
5.48
5.52
5.56
5.60
6.66
6.88
9.79
9.77
9.74
20.43
Future estimated Pledged Revenues are based on fiscal year 2012 collections provided by the City. There is no assurance that
Pledged Revenues received in the future will equal the Pledged Revenues used in coverage computations. See “PLEDGED
REVENUES” herein.
Coverage calculations are based solely on Pledged Revenues pledged to payment of the Bonds and outstanding Parity Obligations.
*Preliminary, subject to change.
17
PLEDGED REVENUES
The Bonds are special obligations of the City, payable from the Pledged Revenues. Pledged
Revenues means the revenues from the State gross receipts tax derived pursuant to Section 7-9-4 NMSA
1978, imposed on persons engaging in business in the State, which revenues are remitted to the City monthly
by the New Mexico Department of Taxation and Revenue pursuant to Section 7-1-6 and 7-1-6.4 NMSA 1978,
and which remittances currently equal one and two hundred twenty-five thousandths percent (1.225%) of the
taxable gross receipts reported for the City for the month for which such remittances is made; provided that if
a greater amount of such gross receipts tax revenues are hereafter provided to be remitted to the City under
applicable law, such additional amounts shall be included as revenues pledged pursuant to the Bond
Ordinance; and provided further that the amount of revenues pledged pursuant to the Bond Ordinance shall
never be less than the greater of: (i) 1.225% of the taxable gross receipts remitted to the City by the State as
set forth above, or (ii) the maximum amount at any time provided hereafter to be remitted to the City under
applicable law, and includes the distribution to the City made pursuant to Section 7-1-6.46 NMSA 1978, as
that distribution relates to the gross receipts tax revenues received pursuant to Section 7-1-6.4 NMSA 1978,
which revenues are reduced pursuant to the deductions under Sections 7-9-92 and 7-9-93 NMSA 1978; and
provided further, the City intends that Section 3-31-6(C) NMSA 1978 applies expressly to the amount of
revenues pledged pursuant to the Bond Ordinance (the term "Pledged Revenues" does not include any local
option gross receipts tax income received by the City).
Taxed Activities. For the privilege of engaging in business in the State of New Mexico, the Gross
Receipts Tax is imposed upon any person engaging in business in the State. "Gross Receipts" is defined in
the Gross Receipts and Compensating Tax Act as the total amount of money or value or other consideration
received from selling property in the State of New Mexico (including tangible personal property handled on
consignment in the State), from leasing property employed in the State of New Mexico, from performing
services in the State of New Mexico and from selling services outside New Mexico, the product of which is
initially used in New Mexico. The definition excludes cash discounts allowed and taken, the Gross Receipts
Tax payable on transactions for the reporting period and any county sales tax, county fire protection excise
tax, county and municipal gross receipts taxes, any time or time-price differential and certain gross receipts or
sales taxes imposed by an Indian tribe or pueblo. Unlike most other states, the State taxes sales of services,
including legal services and certain medical services.
Legislative Changes. Revisions to laws of the State affecting taxed activities and distributions of
gross receipts tax revenues could be adopted in the future by the State Legislature. Proposals affecting taxed
activities and distributions are frequently considered by the State Legislature. There is no assurance that any
future revisions to State laws will not adversely affect activities now subject to the gross receipts tax or
distribution of gross receipts tax revenues to the City. See "SPECIAL FACTORS RELATING TO THE
BONDS -State Legislation" herein.
Exemptions. Some activities and industries are exempt from the Gross Receipts Tax, many by virtue
of their taxation under other laws. Exemptions include, but are not limited to, certain receipts of
governmental agencies and certain organizations, receipts from the sale of vehicles, occasional sales of
property or services, wages, certain agricultural products, dividends, and interest and receipts from the sale of
or leasing of natural gas, oil or mineral interests. Various deductions are allowed including but not limited to
receipts from various types of sales and leases of tangible personal property or services, receipts from sales to
governmental agencies or certain organizations, receipts from processing certain agricultural products,
receipts from certain publication sales, certain receipts from interstate commerce transactions, receipts from
retail sales of food (not including restaurant sales and certain sales of prepared foods), and receipts of licensed
medical care providers from Medicare Part C. There are over fifty specified exemptions and deductions from
18
gross receipts taxation, nevertheless, the general presumption is that all receipts of a person engaging in
business in the State of New Mexico are subject to the Gross Receipts Tax.
Manner of Collection and Distribution of Gross Receipts Tax. Businesses must make their payments
of Gross Receipts Tax on or before the twenty-fifth of each month for taxable events in the prior month.
Collection of the State Gross Receipts Tax is administered by the Revenue Division of the Taxation and
Revenue Department of the State (the "Revenue Division"), pursuant to Section 7-1-6, NMSA. Collections
are first deposited into a suspense fund for the purpose of making disbursements for refunds, among other
items. On the last day of each month, the balance of the suspense fund is transferred to the State general fund,
less disbursements to the municipalities in the State.
Remedies for Delinquent Taxes. The Revenue Division may assess gross receipts taxes to a taxpayer
who has not paid the taxes due to the State. If any taxpayer to whom gross receipts taxes have been assessed
or upon whom demand for payment has been made does not make payment thereof (or protest the assessment
or demand for payment) within 30 days after the date of assessment or demand for payment, the taxpayer
becomes a delinquent taxpayer. Such taxpayer remains delinquent until payment of all the taxes due,
including interest and penalties, or until security is furnished for the payment thereof. The Revenue Division
may, under certain circumstances, enter into an agreement with a delinquent taxpayer to permit monthly
installment payments for a period of not more than 36 months. Interest is due on any delinquent tax from the
first day following the day on which it is due at the rate of 1.25% per month until paid, without regard to any
installment agreement. However, if the Gross Receipts Tax is paid within 10 days after demand is made, no
interest shall be imposed for the period after the date of demand.
The Revenue Division may levy upon all property or rights to property of a delinquent taxpayer and
sell the same in order to collect the delinquent tax. The amount of delinquent Gross Receipts Taxes is also a
lien in favor of the State upon all property and rights to property of the delinquent taxpayer, which lien may
be foreclosed as provided by State statutes.
State Shared Gross Receipts Tax Report. Set forth below is a 5-year history of the State Shared
Gross Receipts Tax Revenues received by the City:
Fiscal Year
Ended 6/30
State Gross
Receipts Tax
Rate
Percentage
Distributed
to City
2012(2)
2011
2010
2009
2008
5.125%
5.125%
5.125%
5.000%
5.000%
1.225%
1.225%
1.225%
1.225%
1.225%
State Shared
Gross Receipts Tax
Revenues(1)
9,593,916
9,367,687
8,809,885
8,875,937
8,753,112
Percent
Increase (Decrease)
2.41%
6.33%
(0.74%)
1.40%
-
____________________
Source: State of New Mexico Department of Finance and Administration, Local Government Division; City of Clovis Finance
Director.
(1)
Includes all Pledged Revenues received by the City. Does not include other gross receipts taxes imposed by the City, which are
not part of Pledged Revenues.
(2)
Unaudited
Other Gross Receipts Taxes (not pledged)
Pledged Revenues consist of the 1.225% State Shared Gross Receipts Tax Revenues. The City also
imposes certain other gross receipts taxes which are not pledged to the repayment of the Bonds. These include
19
six additional 0.25% increments of Municipal Gross Receipts Tax totaling 1.5%, a 0.25% Municipal
Infrastructure Gross Receipts Tax, a 0.25% Municipal Capital Outlay Tax, and a 0.0625% Municipal
Environmental Services Gross Receipts Tax. The total gross receipts tax rate within the City is 7.8125%
(combined State (5.125%), County (0.625%) and City (2.0625%) gross receipts tax rates).
Gross Receipts Reported by Standard Industrial Classification
The following represents total taxable gross receipts reported in the City by Standard Industrial
Classification:
Total Taxable Gross Receipts
Fiscal Year
Classification
Agriculture
Mining
Utilities
Construction
Manufacturing
Wholesale
Retail
Transport.
Information & Cultural
Finance
Real Estate
Professional
Management
Waste Manag.
Educational Services
Health Care
Arts
Hospitality
Other
Unclassified
Total Taxable
Total Reported
___________________
Source: New Mexico Taxation and Revenue Department.
(1)
Includes nine month period ending March 31st, 2012
2012(1)
440,059
30,929,425
61,910,102
2,019,000
8,924,671
202,238,311
2,491,753
24,277,411
2,625,332
8,412,474
17,733,039
4,246,664
312,010
32,451,083
535,073
56,236,420
48,418,786
472,632
504,674,243
996,249,680
20
2011
619,721
37,505,369
90,494,638
2,845,019
11,630,916
267,643,583
3,160,779
29,507,275
4,080,520
10,274,386
25,287,260
4,785,916
767,538
39,493,063
571,492
74,004,018
68,589,316
1,468,864
672,729,672
1,209,087,996
2010
1,006,294
37,514,100
60,040,291
2,838,713
10,956,256
257,984,572
2,798,170
30,499,287
2,853,186
10,026,700
27,620,599
4,418,604
515,389
39,565,166
549,857
68,735,212
64,566,893
1,899,812
624,389,101
1,071,410,263
2009
1,340,331
36,521,174
72,977,072
3,129,083
11,786,285
249,173,152
2,559,904
20,608,546
4,693,962
9,710,796
25,883,014
3,793,695
504,714
39,902,669
543,526
66,429,063
75,827,452
2,447,900
627,832,337
1,110,592,823
Historical Total Gross Receipts Reported For City, County and State
The following represents the total gross receipts reported in the City, the County and the State. Total
gross receipts and total taxable gross receipts reported in the tables below include amounts representing the
sale of items which may not be subject to Gross Receipts Tax. See "PLEDGED REVENUES – Taxed
Activities" and "PLEDGED REVENUES – Exemptions" herein for an explanation of activities which are
subject to, or exempt from, Gross Receipts Tax.
Calendar Year
2011
2010
2009
2008
2007
City of Clovis
Total
1,209,087,996
1,071,410,263
1,110,592,823
1,066,111,080
986,237,687
Curry County
Total
1,726,857,298
1,391,491,727
1,470,698,703
1,423,195,758
2,230,686,359
State of New Mexico
Total
102,715,750,442
94,722,576,401
104,562,006,074
110,710,199,751
103,740,330,414
___________________
Source: New Mexico Taxation and Revenue Department and UNM Bureau of Business and Economic Research.
Historical Taxable Gross Receipts Reported For City and State
Fiscal Year
2012(1)
2011
2010
2009
Taxable Gross Receipts
Reported in
City of Clovis
$680,685,676
672,729,672
624,389,101
627,832,337
Taxable Gross Receipts
Reported in
State of New Mexico
$49,600,793,841
47,900,969,677
45,117,483,589
48,383,671,602
___________________
Source: New Mexico Taxation and Revenue Department.
ADDITIONAL OBLIGATIONS PAYABLE FROM PLEDGED REVENUES
Parity Obligations
Nothing in the Bond Ordinance shall be construed in such a manner as to prevent the issuance by the
City of additional bonds or other obligations payable from the Pledged Revenues and constituting a lien upon
the Pledged Revenues on a parity with, but not prior or superior to, the lien of the Bonds, nor to prevent the
issuance of bonds or other obligations refunding all or a part of the Bonds herein authorized, provided,
however, that before any such additional Parity Obligations are issued including those parity lien refunding
bonds and other parity lien refunding obligations which refund subordinate lien bonds and other subordinate
lien obligations, but not including parity lien refunding bonds and other parity lien refunding obligations
which refund outstanding Parity Obligations as permitted by the Bond Ordinance and described below:
(a)
the City is then current in all of the accumulations required to be made in the pursuant to the
Bond Ordinance;
(b)
no default shall exist in connection with any of the covenants or requirements of the Bond
Ordinance; and
(c)
the Pledged Revenues received by the City for the Fiscal Year immediately preceding the
date of issuance of such additional Parity Obligations shall have been sufficient to pay an amount representing
21
at least 200% of the combined maximum annual principal and interest coming due in any subsequent Fiscal
Year on the then Outstanding Bonds, all other then outstanding Parity Obligations and the Parity Obligations
proposed to be issued (excluding any reserves therefor); provided that if such additional Parity Obligations are
issued as variable rate obligations, the highest interest rate allowed by the instruments authorizing such
additional Parity Obligations shall be used in making such calculation.
Certification or Opinion Regarding Pledged Revenues. A written certificate or opinion by the City
Treasurer that the Pledged Revenues are sufficient to pay the required amounts under the test set forth above,
shall conclusively determine the right of the City to issue additional Parity Obligations. The City Treasurer
may utilize the results of any annual audit to the extent it covers the applicable period.
Debt Service Reserve Funds or Accounts. The City may establish a reserve fund or account pursuant
to the provisions of the applicable ordinance authorizing the issuance of additional Parity Obligations for the
purpose of paying or securing such additional Parity Obligations or any specific group of issues or series of
additional Parity Obligations and the amounts once deposited in said funds or accounts shall no longer
constitute Pledged Revenues but shall be held solely for the benefit of the Owners of the particular issue or
series or group of issues or series of additional Parity Obligations for which such fund or account was
established; provided, however, any pledge of and lien on the Pledged Revenues of such reserve fund shall be
junior and subordinate to the pledge and lien of the Parity Obligations (and the requirements of the Bond
Ordinance) and shall be on a parity with, or otherwise junior and subordinate to, the pledge of and lien on the
Pledged Revenues of the Series 2012 Reserve Fund. Each such fund or account shall be designated in such
manner as is necessary to identify the additional Parity Obligations it secures and to distinguish such fund
from any other funds or accounts created for the benefit of any other Parity Obligations.
Subordinate Obligations Permitted. Nothing in the Bond Ordinance contained shall be construed in
such a manner as to prevent the issuance by the City of additional bonds or other obligations payable from the
Pledged Revenues and constituting a lien upon the Pledged Revenues subordinate, inferior and junior to the
lien on the Bonds.
Superior Obligations Prohibited. Nothing herein contained shall be construed so as to permit the
City to issue bonds or other obligations payable from the Pledged Revenues having a lien thereon prior and
superior to the Bonds.
Refunding Bonds
The provisions of the Bond Ordinance described above are subject to the following exceptions:
Privilege of Issuing Refunding Obligations. If at any time after the Bonds, or any part thereof, shall
have been issued and remain outstanding, the City shall find it desirable to refund any outstanding bonds or
other outstanding obligations payable from the Pledged Revenues, such bonds or other obligations, or any part
thereof, may be refunded (but only with the consent of the registered owner or owners thereof, unless the
bonds or other obligations, at the time of their required surrender for payment, shall then mature, or shall then
be callable for prior redemption at the City’s option), regardless of whether the priority of the lien for the
payment of the refunding obligations on the Pledged Revenues is changed (except as provided in the Bond
Ordinance).
Limitations Upon Issuance of Parity Refunding Obligations. No refunding bonds or other refunding
obligations payable from the Pledged Revenues shall be issued on a parity with the Bonds, unless:
(i)
The lien on the Pledged Revenues of the outstanding obligations so refunded is on a parity
with the lien thereon of the Bonds; or
22
(ii)
Ordinance.
The refunding bonds or other refunding obligations are issued in compliance with the Bond
Refunding Part of an Issue. The refunding bonds or other obligations so issued shall enjoy complete
equality of lien with the portion of any bonds or other obligations of the same issue which is not refunded, if
any there be; and the registered owner or owners of such refunding bonds or such other refunding obligations
shall be subrogated to all of the rights and privileges enjoyed by the registered owner or owners of the bonds
or other obligations of the same issue refunded thereby.
Limitations Upon Issuance of any Refunding Obligations. Any refunding bonds or other refunding
obligations payable from the Pledged Revenues shall be issued with such details as the City may by ordinance
provide, but without any impairment of any contractual obligations imposed upon the City by any
proceedings authorizing the issuance of any unrefunded portion of such outstanding obligations of any one or
more issues (including, without limitation, the Bonds). If only a part of the outstanding Bonds and any other
outstanding obligations of any issue or issues payable from the Pledged Revenues is refunded, then such
obligations may not be refunded without the consent of the registered owner or owners of the unrefunded
portion of such obligations, unless:
(a)
The refunding bonds or other refunding obligations do not increase any aggregate annual
principal and interest requirements evidenced by such refunding obligations and by the outstanding
obligations not refunded on and prior to the last maturity date of such unrefunded obligations; or
(b)
Ordinance; or
The refunding bonds or other refunding obligations are issued in compliance with the Bond
(c)
The lien on the Pledged Revenues for the payment of the refunding obligations is subordinate
to each such lien for the payment of any obligations not refunded.
CITY COVENANTS IN THE BOND ORDINANCE
The City covenants in the Bond Ordinance, among other things, that:
Use of Bond Proceeds. The City, with the proceeds derived from the sale of the Bonds, shall proceed
without delay to carry out the Project as herein provided.
Payment of Bonds. The City shall promptly pay the principal of and the interest of every Bond at the
place, on the dates and in the manner specified herein and in the Bonds according to the true intent and
meaning hereof. Such principal and interest are payable solely from the Pledged Revenues; provided that
nothing herein shall prevent the City, in its discretion, from paying such principal and interest from any other
legally available funds.
Records. The City shall keep books of record and account, separate and apart from all other records
and accounts, showing complete and correct entries of all transactions relating to the Pledged Revenues.
Audits. The City shall, within 270 days following the close of each Fiscal Year, cause an audit of
such books and accounts related to the Pledged Revenues to be made by an Independent Accountant unless
the audit cannot be conducted within 270 days following the close of each Fiscal Year because the State
Auditor or other authority of the State with superintending control of the audit directs that the audit be made
by a designated auditor under different time deadlines or by the State Auditor’s office and staff, in which
case, the City will use its best efforts to have the audit completed as soon as possible following the close of
the Fiscal Year.
23
Extending Interest Payments. In order to prevent any accumulation of claims for interest after
maturity the City shall not directly or indirectly, extend or assent to the extension of the time for payment of
any claim for interest on any of the Bonds, and it shall not directly or indirectly be a party to or approve any
arrangement for such extension or for the purpose of keeping alive any of said interest and in case the time for
payment of any such interest shall be extended, such installment or installments of interest after such
extension or arrangement shall not be entitled in case of default hereunder to the benefit or security of this
Ordinance except subject to the prior payment in full of the principal of all Bonds then outstanding, and of
matured interest on such Bonds the payment of which not been extended.
Performing Duties. The City shall faithfully and punctually perform all duties with respect to the
Bonds required by Constitution and laws of the State of New Mexico and the home-rule charter of the City,
ordinances and resolutions of the City, including but not limited to the proper segregation of the Pledged
Revenues and their application to the respective funds and accounts.
Other Liens. Other than as described in this Ordinance, there are no liens or encumbrances of any
nature, whatsoever, on or against the Pledged Revenues.
Duty with Respect to Pledged Revenues. If the statutes or any ordinance which materially affects the
Pledged Revenues or any part of such ordinances shall ever be held to be invalid or unenforceable, the City
shall immediately take any action necessary to produce sufficient Pledged Revenues to comply with the
contracted obligations of this Ordinance.
Impairment of Contract. Any law or ordinance or resolution of the City in any manner affecting the
Pledged Revenues or the Bonds, or otherwise appertaining thereto, shall not be repealed or otherwise directly
or indirectly modified, in such a manner as to impair adversely any Bonds Outstanding, unless the consent of
the required percentage of the Owners of the then Outstanding Bonds is obtained pursuant to Section 34.
City’s Existence. The City shall maintain its corporate identity and existence unless another political
subdivision by operation of law succeeds to the duties, privileges, powers, liabilities, disabilities, immunities
and rights of the City, and is obligated by law to receive and distribute the Pledged Revenues in place of the
City, without affecting to any substantial degree the privileges and rights of any Owner.
Tax Covenant. The City shall not take any action or omit to take any action with respect to the
Bonds, the proceeds thereof, any other funds of the City or any facilities financed with the proceeds of the
Refunded Bonds if such action or omission: (i) would cause the interest on the Bonds to lose its exclusion
from gross income for federal income tax purposes under Section 103 of the Code; or (ii) would cause interest
on the Bonds to lose its exclusion from alternative minimum taxable income as defined in Section 55(b)(2) of
the Code except to the extent such interest is required to be included in the adjusted current earnings
adjustment applicable to corporations under Section 56 of the Code in calculating corporate alternative
minimum taxable income. This covenant shall remain in full force and effect notwithstanding the payment in
full or defeasance of the Bonds until the date on which all obligations of the City in fulfilling the above
covenant under the Code have been met.
Continuing Disclosure Undertaking. The officers of the City are authorized to sign such documents
and to take such actions in the future with respect to the City's continuing disclosure obligations as are
necessary or desirable to comply with the Continuing Disclosure Undertaking and the requirements of Rule
15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended. Notwithstanding any other provisions of the Bond Ordinance, failure of the City to
comply with the Continuing Disclosure Undertaking shall not be considered an "event of default", and holders
24
and beneficial owners of Bonds shall be entitled to exercise only such rights with respect thereto as are
provided in the Continuing Disclosure Undertaking.
THE CITY
General
The City is a political subdivision of the State of New Mexico organized and existing under the
Constitution and laws of the State. Clovis serves as the county seat of Curry County, New Mexico. The City
was incorporated in 1909 and operates under a home-rule charter adopted in 1971 and amended in 2004.
The City operates under a Commission-Manager form of government with the Mayor having limited
duties.
Government
Commissioners and the Mayor are elected for staggered four year terms. The Mayor and the City
Commission and the date of expiration of their current terms are as follows:
Office
Name
David Lansford
Chris Bryant
Randy Crowder
Juan F. Garza
Fidel Madrid
Robert Sandoval
Dan Stoddard
Sandra Taylor-Sawyer
Len Vohs
Mayor
Commissioner, District 4
Commissioner, District 1
Commissioner, District 1
Commissioner, District 3
Commissioner, District 3
Commissioner, District 4
Commissioner, District 2
Commissioner, District 2 and
Mayor Pro-Tem
Current Term
Expires
2016
2016
2016
2014
2016
2014
2014
2016
2014
Administrative Officers
Joe Thomas, City Manager. The City Manager is the administrative head of the City and is responsible to the
City Commission for the administration and execution of all affairs of the City. The City Manager oversees
and prepares a complete report on administrative activities of the City and keeps the City Commission
advised of the financial condition and future needs of the City. The City Manager is responsible for (14)
fourteen different departments. The City Manager also has an Executive Assistant, and a Secretary.
Other Employees
As of June 30, 2012, the City has approximately 432 full time, part time and seasonal employees, 34
of which are represented by labor unions. The City believes that relations with its employees are good.
Public Employee Retirement Association
The City participates in a pension plan organized on a statewide basis and operated by the State of
New Mexico. The Public Employees' Retirement Association of New Mexico ("PERA"), established by
Section 10-11-1 et seq. NMSA 1978, as amended, requires contributions to its plan (the "Plan"), computed as
25
a percentage of salary, from both employee and employer for all full time employees. The majority of State
and municipal employees in New Mexico participate in the Plan. The Plan requires the following
contribution percentages:
City
18.50%
21.25%
11.65%
Police
Fire
All other contributing employees
Employees
16.30%
14.80%
10.65%
In addition to retirement benefits, the Plan provides disability benefits, surviving spouse and
children's benefits, deferred benefits option and cost of living adjustments for all eligible participants. City
contributions to the Plan amounted to approximately $564,727 for the fiscal year ended June 30, 2011. The
City's liability under the Plan is limited to the periodic employer contributions, as described above, that it is
required to make for its participating employees.
PERA issues a publicly available financial report that includes financial statements and additional
information. A copy of this report can be obtained by writing to PERA, P.O. Box 2123, Santa Fe, New
Mexico 87504-2123.
Actuarial information, as of June 30, 2010, is shown below:
State of New Mexico Public Employees Retirement Fund
Summary Information as of June 30, 2010
Membership1
Actuarial Information
Actuarial Accrued Liability2
Actuarial Value of Assets
Unfunded Actuarial Accrued Liability
84,528
$15,601,461,460
12,243,712,850
3,357,748,610
____________________
Source: PERA Annual Actuarial Valuation
1
Includes active and retired members from all divisions.
2
Includes accrued liability of both the retired and active members.
The Plan suffered as a result of volatility in the financial markets and economic recession from late
2007 into 2009. The Plan lost approximately 30% of its value as of February 2009 and closed Fiscal Year
2009 with a loss of 24.27%. The Plan experienced positive gains in Fiscal Year 2010 with a total fund return
of 15.02%. The balance of the fund as of September 30, 2010 was approximately $11.125 billion dollars.
The 12-month return for the 12 month period ending September 30, 2010 was 11.66%, primarily attributable
to good market conditions and performance of the fund. There are approximately 49,097 active members of
PERA, 8342 inactive members of PERA and approximately 27,089 retirees and beneficiaries receiving
benefits from PERA as of June 30, 2010. The State legislature has made significant changes to the existing
system, which changes impact future members, in order to address the potential future insolvency of the
retirement plan. Under current law, the City is not responsible for any future deficiencies in the retirement
plan.
New Mexico Retiree Health Care Authority
The City contributes to the New Mexico Retiree Health Care Fund, a cost sharing, multiple employer,
defined benefit post-employment health care plan administered by the New Mexico Retiree Health Care
Authority ("NMRHCA"). The NMRHCA provides health care insurance and prescription drug benefits to
26
retired employees of participating New Mexico government agencies, their spouses, dependents, and
surviving spouses and dependents. The RHCA Board was established by the Retiree Health Care Act
(Sections 10-7C-1 through 10-7C-19 NMSA 1978). The Board is responsible for establishing and amending
benefit provisions of the health care plan and is also authorized to designate optional and/or voluntary benefits
such as dental, vision, supplemental life insurance, and long-term policies.
The Retiree Health Care Act establishes the required contributions of the participating employers and
their employees. Contributions are scheduled to be increased for both employers and employees as follows:
employer contributions in Fiscal Year 2011 -- 1.666%, Fiscal Year 2012 – 1.834%, and Fiscal Year 2013 –
2.000%; employee contributions in Fiscal Year 2011 – 0.833%, Fiscal Year 2012 – 0.917%, and Fiscal Year
2013 – 1.000%. Prior to this change, each participating employer was required to contribute 1.3% of each
participating employee's annual salary and each participating employee was required to contribute 0.65% of
his salary. A financial report from the NMRHCA can be obtained at 4308 Carlisle Blvd. NE, Suite 104,
Albuquerque, NM 87107.
Based on the Governmental Accounting Standards Board ("GASB") Statement 43 valuation for the
Fiscal Year ended June 30, 2006, and assuming that the NMRHCA Fund is an equivalent arrangement to an
irrevocable trust and, hence using a discount rate of 5.0%, the unfunded actuarial accrued liability has been
calculated to be approximately $4.1 billion. As required by GASB Statement 43, this calculation takes into
consideration only current assets of the NMRHCA Fund. The Legislative Council, the Legislative Finance
Committee, the Governor and the NMRHCA, as required by statute, established a working group that, among
other things, examined the options to improve the actuarial soundness of the NMRHCA Fund and reported its
findings to the Governor, the New Mexico Legislative Council, at the Legislative Finance Committee and the
NMRHCA.
In January 2008, NMRHCA's fund was projected to be insolvent by June 2014. However, recent
actions by the NMRHCA have improved its financial outlook. The NMRHCA Board recently approved an
8% premium increase starting in 2011 which is expected to help ensure solvency. On July 9, 2010 NMRHCA
announced that it has applied for $20 million dollars in reimbursements under the recently enacted federal
health care reform bill. The funds are available under the early retirement provision and should help lower
costs for retirees under 65. These actions, taken together are expected to increase the projected solvency
period to the year 2028. NMRHCA also established, as policy, that premium increases going forward should
track medical trend increases. In the past, premium increases were substantially lower than medical inflation,
which was a leading contributor to declining solvency. Under current law, the City is not responsible for any
future deficiencies in NMRHCA.
City Budgets
The City adheres to the following procedure in establishing its annual budget: the City Staff prepares
a budget which is forwarded to the City Commission prior to May 1 for the fiscal year commencing the
following July 1; public input is sought by the City Council during the month of May through public hearings;
the budget is approved by the City Council and forwarded for approval to the State of New Mexico, Local
Government Division of the Department of Finance and Administration; the final budget is returned to the
City with recommended changes and modifications; and the final budget is acknowledged by the City
Council.
The operating budget includes proposed expenditures and the means of financing them.
The City Manager is authorized to transfer budgeted amounts between departments within any fund,
but he must obtain approval of the City Commission and the State prior to making revisions that alter the total
27
expenditures of any fund. As a management control device, the City employees formal budgetary integration
at the line item level.
Deficit financing is not permitted under New Mexico law. The level of classification detail at which
expenditure may not legally exceed appropriation for each budget item is the fund level (i.e., General, Water,
Wastewater, etc.).
Industry
Education
Clovis Municipal School District No. 1 is a political subdivision of the State organized for the
purpose of operating and maintaining an educational program for the school age children residing within its
boundaries. The District encompasses approximately 462 square miles which includes the City and
unincorporated portions of Curry County. The District’s enrollment is approximately 8,588 students. The
District operates 12 elementary schools, 1 early education center, 2 middle schools, 1 freshman campus, 1
family center, and 1 senior high school.
Clovis Community College is a two-year comprehensive community college established in 1991.
The College offers a variety of academic and vocational instructional programs; student services; community
services; developmental education; and social, recreational and cultural enrichment. The current student
population is over 4,000.
Eastern New Mexico University is located 18 miles from Clovis in Portales, New Mexico. It is a
fully accredited co-educational university offering undergraduate, graduate and professional degree-granting
programs. The University, a land grant institution of the State of New Mexico, which was founded in 1927,
maintains educational facilities on a main campus and has one branch campuses. The Portales campus has an
enrollment of over 5,000 students.
Agriculture
The City is situated in the center of an extensive farming and ranching region. Wheat, sorghum, corn,
sugar beets, alfalfa, barley, soybeans and potatoes grow well in the region’s many dry land farms. Dairy
cattle are present in the area, making dairy production another major contributor to the local economy. In
2010, Curry County accounted for almost 16.7% of cash receipts for all farm commodities within the State of
New Mexico, making it the largest agricultural center in the State.
Transportation
Transportation is provided through a modern highway system which includes U.S. Highways 60,
70 and 84 and New Mexico Highways 18, 423 and 77. The Atchison, Topeka and Santa Fe Railway also
operates a major switching facility at its Clovis railroad yard. Air transportation also is available through
the Clovis Municipal Airport where Mesa Air operates daily flights to and from Albuquerque, New
Mexico.
Cannon Air Force Base
Cannon Air Force Base, named in honor of General John K. Cannon, a former commander of the
Tactical Air Command, is located six miles west of Clovis and is 4,295 feet above sea level. The history of
the Base began in the late 1920s, when a civilian passenger facility, Portair Field, was established on the site.
28
Since then until present time, Cannon has had a rich history of different missions.
On May 13, 2005, Cannon AFB was placed on the DoD BRAC list for closure. A BRAC
Commission public hearing was held in an effort to get Cannon AFB off the list.
On August 26, 2005, the BRAC recommended that Cannon AFB be placed in an enclave status until
Dec.31, 2009. Finding a new mission for Cannon was a top priority for the Air Force. Local and public
officials worked diligently to insure Cannon’s assets were fully utilized.
On October 1, 2007, a new era began at Cannon AFB as the new Special Operations Wing (“SOW”)
activated as the 27th SOW, a new component of Air Force Special Operations Command (“AFSOC”).
On June 18, 2010, the CV-22 Osprey made its official arrival to Cannon AFB. A total of 15 Ospreys
are planned for Cannon AFB. The CV-22 Osprey is a tilt rotor aircraft that combines the vertical takeoff,
hover and vertical landing qualities of a helicopter with the long-range, fuel efficiency and speed
characteristics of a turboprop aircraft. Its mission is to conduct long-range infiltration, exfiltration and
resupply missions for special operations forces.
Currently, 4,722 active-duty members and government civilians and 693 permanent party contractors
make up the work force at Cannon Air Force Base.
Labor Force and Percent Unemployed
The following table, derived from information supplied by the New Mexico Department of
Workforce Solutions, presents information on employment within Curry County, the State and the United
States, for the periods indicated. The annual unemployment figures indicate average rates for the entire year
and do not reflect monthly or seasonal trends.
Year
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
Curry County
Labor
Percent
Force
Unemployed
21,243
4.90%
21,449
4.50%
22,187
5.50%
21,351
3.60%
21,622
2.60%
21,158
2.90%
21,105
3.50%
20,630
4.30%
20,286
4.40%
20,706
3.70%
State of New Mexico
Labor
Percent
Force
Unemployed
932,132
7.00%
941,871
6.90%
962,256
8.30%
954,072
5.70%
942,173
3.80%
938,383
3.80%
935,350
4.20%
915,489
5.30%
902,080
5.80%
899,383
5.80%
___________________
*Through June 2012
Source: New Mexico Department of Workforce Solutions.
29
United States
Percent
Unemployed
8.20%
9.00%
9.60%
8.10%
4.80%
4.50%
4.50%
4.90%
5.40%
5.80%
Covered Wage and Salary Employment by NAICS Code Classification for Curry County
The New Mexico Department of Workforce Solutions publishes quarterly reports of covered
employment and wages. Employment is classified according to the North American Industry Classification
System (NAICS).
Curry County
Grand Total
Total Private
Agriculture, Forestry, Fishing & Hunting
Mining
Utilities
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation & Warehousing
Information
Finance & Insurance
Real Estate & Rental & Leasing
Professional & Technical Services
Management of Companies & Enterprises
Administrative & Waste Services
Educational Services
Health Care & Social Assistance
Arts, Entertainment & Recreation
Accommodation & Food Services
Other Services, ex. Public Administration
Unclassified
Total Government
Federal
State
Local
2006
2007
2008
2009
2010
$26,593
24,669
52,712
29,681
34,239
24,355
20,797
27,298
28,325
33,549
20,918
19,856
7,704
10,848
19,575
33,134
34,260
36,302
37,998
32,828
$27,666
25,685
56,175
28,642
36,198
22,049
22,076
32,545
26,343
34,109
23,020
21,103
66,596
29,812
7,993
11,330
19,402
10,173
35,596
41,272
40,411
32,824
$29,006
27,193
28,001
85,409
56,190
34,359
36,400
24,632
22,676
33,922
29,332
35,615
25,026
20,900
63,367
29,848
8,071
12,012
20,160
7,020
36,314
41,174
42,087
33,653
$29,910
27,985
60,739
35,458
37,243
29,520
22,894
33,291
29,739
35,933
22,006
22,091
7,866
29,828
8,934
12,876
21,160
*
37,484
42,457
44,362
34,549
$30,485
28,615
63,780
33,534
38,649
32,612
23,689
35,890
29,819
37,400
22,371
27,938
21,369
30,590
11,955
12,619
21,878
*
37,753
43,320
42,263
34,764
*There was no employment in this sector.
Source: New Mexico Dept. of Workforce Solutions
30
Major Employers
The following are the thirteen largest employers (according to approximate number of employees)
located in Clovis.
Largest Employers
City of Clovis
Employer Name
Cannon AFB Active Duty Personnel
Allsup’s Convenience Stores
Clovis Municipal Schools
Cannon AFB Civilian Personnel
Plains Regional Medical Center
Burlington Northern Santa Fe Railway
City of Clovis
Wal-Mart
ENMRSH, Inc.
Clovis Community College
Southwest Cheese
Plateau Telecommunications
Community Homecare
State of New Mexico Employees
Curry County
Number of Employees
5,439
3,000
1,050
686
600
550
448
400
360
359
330
278
250
240
165
__________________
Source: Clovis Chamber of Commerce, updated January 2012.
Per Capita Income
The following table sets forth annual per capita personal income levels for Curry County, the State of
New Mexico, and the United States. Curry County’s and the State's per capita income levels over this period
have been lower than the national average.
Year
2011
2010
2009
2008
2007
2006
Curry
County
N/A
36,931
34,165
34,711
31,560
28,636
New
Mexico
$34,575
33,837
32,992
33,389
32,093
30,513
United
States
$41,663
40,584
39,138
40,166
39,392
37,968
___________________
Source: UNM Bureau of Business & Economic Research
Effective Buying Income
The following table reflects the percentage of households by Effective Buying Income ("EBI") and a
three-year comparison of the estimated median household income as reported by Nielson Claritas, Inc. EBI is
personal income less personal tax and non-tax payments. Personal income includes wages and salaries, other
labor income, proprietors' income, rental income, dividends, personal interest income, and transfer payments.
Deductions are made for federal, state, and local taxes, non-tax payments such as fines and penalties, and
personal contributions for social security insurance. The following chart depicts the median household EBI
level for the City of Clovis, Curry County, the State of New Mexico and the United States.
31
Effective Buying
Income Group
City of Clovis
Curry County
New Mexico
United States
35.2%
15.4%
17.5%
16.6%
15.3%
34.2%
15.6%
17.9%
17.2%
15.2%
28.1%
12.3%
16.2%
18.8%
24.6%
23.8%
11.1%
15.5%
19.5%
30.1%
$34,624
34,967
36,442
35,227
$35,223
35,167
36,758
35,532
$41,958
42,030
43,932
42,752
$49,581
49,726
52,795
51,433
Under $25,000
$25,000 – 34,999
$35,000 – 49,999
$50,000 - 74,999
$75,000 and over
2012 Est. Median Household Income
2011 Est. Median Household Income
2010 Est. Median Household Income
2009 Est. Median Household Income
____________________
Source: Nielson Company, 2012
Age Distribution
The following table sets forth a comparative age distribution profile for the City of Clovis, Curry
County, the State of New Mexico and the United States as of 2012.
Age Group
City of Clovis
Curry County
New Mexico
United States
0-17
18-24
25-44
45-54
55 and Older
29.8%
9.8%
26.9%
11.7%
21.9%
29.6%
10.8%
26.8%
11.8%
21.0%
25.7%
9.8%
26.1%
13.9%
24.5%
24.5%
9.7%
27.0%
14.6%
24.2%
____________________
Source: Nielsen Company, 2012
Population
The following table sets forth the population of the City of Clovis and the State of New Mexico,
based on the United States Census through 2010 and as projected for 2020 and 2030.
Based on information gained from the Bureau of Business & Economic Research, the following table
shows both the historical and projected population data for the State of New Mexico and the City of Clovis.
Year
2030*
2020*
2010
2000
1990
1980
1970
1960
City of Clovis
N/A
N/A
37,775
32,667
30,954
31,194
28,495
23,713
____________________________
Source: U.S. Census Bureau & UNM Bureau
of Business & Economic Research
32
State of New Mexico
2,864,796
2,540,145
2,059,179
1,819,046
1,515,369
1,303,143
1,017,055
951,023
Building Permits and Assessed Valuations
City of Clovis, New Mexico
Building Permits
Year
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Number
Valuation
of Permits
$37,334,860
195
33,976,425
164
47,392,109
220
37,616,681
254
26,442,482
153
42,792,540
251
24,517,508
161
34,364,774
281
17,792,951
149
11,600,453
130
_______________________
Source: UNM Bureau of Business & Economic Research
History of Assessed Values
Tax Year
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
City of Clovis
497,823,897
450,437,286
422,630,571
398,093,122
364,709,040
329,082,351
304,253,782
287,253,542
281,216,897
279,319,948
____________________
Source: Curry County Assessor’s Office
33
Curry County
698,324,849
650,202,134
626,026,206
594,198,887
546,875,579
491,212,082
451,314,773
429,008,933
418,326,355
405,753,895
Historical General Fund Balance Sheet
Fiscal Year Ending June 30:
2010
2009
2011
ASSETS
Cash and investments
Restricted cash and investments
Receivable:
Property taxes
Intergovernmental
Other receivables
Inventory
Prepaid insurance
Due from other funds
Total assets
LIABILITIES AND FUND BALANCES
Liabilities
Accounts Payable
Accrued payroll expenses
Other accrued expenses
Accrued compensated absences
Deposits held in trust
Deferred property tax revenue
Other deferred revenue
Due to other funds
Total liabilities
Fund balances
Reserved
Prepaid Insurance
Nonspendable
Unreserved
General
Unassigned
Total fund balances
Total liabilities and fund balances
2008
$4,193,059
-
$3,842,012
$3,650,515
-
$3,928,942
-
105,793
2,574,189
162,429
6,247
356,656
2,028,289
113,088
2,625,242
173,831
4,808
340,915
1,264,207
343,186
2,904,061
153,172
4,749
339,103
1,746,439
94,510
2,744,944
230,020
392,915
1,429,469
$9,426,662
$8,364,103
$9,141,225
$8,820,800
$105,392
694,233
131,383
67,476
10,496
-
$20,359
840,137
72,636
58,828
-
$64,277
162,738
72,636
319,803
-
$353,324
47,131
-
1,008,980
991,960
619,454
516,660
362,903
340,915
339,103
392,915
8,054,779
8,417,682
7,031,228
7,372,143
8,182,668
$8,521,771
7,911,225
8,304,140
$9,426,662
$8,364,103
$9,141,225
$8,820,800
72,636
43,569
-
Source: The amounts shown for each fiscal year were derived from the City’s audited financial statements. Reference is made to
such financial statements and related audit reports which are available upon request.
34
Historical General Fund Revenues, Expenditures and Changes in Fund Balances
Fiscal Year Ending June 30:
2010
2009
2011
REVENUES
Taxes:
Property
Gross receipts
Gasoline and motor vehicle
Other
Intergovernmental:
Federal operating grants
Federal capital grants
State operating grants
State capital grants
Charges for services
Fines, forfeitures, and penalties
Licenses and fees
Investment income
Miscellaneous
Total revenues
EXPENDITURES
Current
General government
Public safety
Public works
Culture and recreation
Health and welfare
Capital outlay:
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues over expenditures
2008
$ 1,613,698
13,773,220
26,863
1,243,943
$ 1,550,536
12,916,706
32,842
831,602
$ 1,257,467
12,881,717
22,900
1,058,726
1,301,740
12,709,354
48,113
1,040,899
184,181
9,849
2,336,319
157,626
463,502
23,447
503,120
411,331
64,791
2,016,890
168,834
369,858
37,160
388,641
319,916
18,771
1,880,302
145,085
334,495
51,128
134,380
971,133
191,342
1,650,391
161,924
304,738
192,885
236,168
20,335,768
18,789,191
18,104,887
18,808,687
3,664,580
13,175,822
283,655
2,251,958
327,879
591,514
3,703,346
13,464,434
272,997
2,109,895
386,341
1,205,481
3,626,325
12,287,260
299,222
1,901,577
336,427
811,508
3,653,614
11,609,381
247,992
1,968,542
335,298
938,927
-
-
-
-
20,295,408
21,142,494
19,262,319
18,753,754
(2,353,303)
(1,157,432)
54,933
939,927
8,440
948,367
1,003,300
40,360
OTHER FINANCING SOURCES (USES)
Transfers in/(out)
Proceeds from sale of capital asset
Proceeds from debt issuance
Total other financing sources (uses)
990,354
14,825
1,005,179
1,203,675
848,705
2,326
851,031
Net change in fund balances
1,045,539
(1,149,628)
(306,401)
1,203,675
Restatement
Beginning fund balance
524,032
7,372,143
8,521,771
7,300,840
8,828,172
Beginning fund balance as restated
Ending fund balance
8,304,140
$ 8,417,682
$ 7,372,143
$ 8,521,771
$ 8,304,140
________________
Source: The amounts shown for each fiscal year are derived from the City’s audited financial statements. Reference is made to such financial
statements and related audit reports which are available upon request.
35
Other City Obligations
The table below summarizes all outstanding revenue bond obligations of the City as of July 1, 2012:
Issue
Date
Original
Principal
Amount
Date of
Final
Maturity
Amount
Outstanding
as of
7/01/2012
Gross Receipts Tax Revenue Bonds, Series
2005
4/7/2005
$3,580,000
6/1/2025
$2,605,000
Gross Receipts Tax Revenue Bonds, Series
2010
9/21/2012
7,000,000
6/1/2030
6,495,000
Gross Receipts Tax Revenue Bonds, Series
2011A
7/22/2011
3,527,000
6/1/2031
3,327,000
Gross Receipts Tax Revenue Bonds, Taxable
Series 2011B
7/22/2011
2,877,000
6/1/2031
2,797,000
NMED Loan
5/19/2006
8,739,413
6/30/2031
7,256,930
Category of Indebtedness
Total Revenue Bond Obligations
$25,723,413
36
$22,480,930
The table below summarizes all outstanding New Mexico Finance Authority Loan obligations of the City as
of July 1, 2012:
Amount
Outstanding
as of
7/01/2012
Interest
Rate
Date of
Final
Maturity
454,280
0.25%
6/1/2028
369,946
3/1/2010
125,000
0.25%
6/1/2029
101,796
ENMRWUA
12/1/2012
905,166
6/1/2030
772,263
Solid Waste Projects
5/1/1999
5,429,707
0.25%
3.15% 4.68%
5/1/2013
489,371
Category of
Indebtedness
Project
Issue
Date
NMFA 2009 WTB-84 Loan
ENMRWUA
9/1/2008
NMFA 2009 WTB-56 Loan
ENMRWUA
NMFA 2010 WTB Loan
NMFA Solid Waste Loan
Total NMFA Loan
Olibgations
Original
Principal
Amount
$6,914,153
$1,733,376
________________
Source: City’s audited financial statements and, as to amounts outstanding as of July 1, 2012, RBC Capital Markets, LLC, as Financial Advisor.
LITIGATION AND INSURANCE
At the time of the original delivery of the Bonds, the City will deliver a certificate to the effect that no
litigation or administrative action of proceedings is pending or, to the knowledge of the appropriate officials,
threatened, restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Bonds,
the effectiveness of the Bond Ordinance, the levying or collecting of taxes to pay the principal of and interest
on the Bonds or contesting or questioning the proceedings and authority under which the Bonds have been
authorized and are to be issued, sold, executed or delivered, or the validity of the Bonds.
The risks of loss through damage to buildings, contents, and heavy equipment, and losses from
employee defalcation are covered by commercial insurance purchased from third parties. Settled claims from
these risks have not exceeded commercial insurance coverage for the past three years. The City has
established a self-insurance fund to manage risks related to physical damage to City vehicles, loss associated
with actions of employees resulting in damage to the persons or property of others, and for employee injury
losses. The risk of loss associated with actions of employees resulting in damage to persons or property of
others is subject to limitations of the New Mexico State Tort Claims Act. The self-insurance fund uses excess
insurance agreements to reduce its exposure to large losses from employee on-the-job injuries.
FINANCIAL ADVISOR
RBC Capital Markets, LLC ("RBC CM") is employed as Financial Advisor to the City of Clovis in
connection with the issuance of the Bonds. The Financial Advisor’s fee for services rendered with respect to
the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. The Financial Advisor is not
obligated to undertake, and has not undertaken to make, an independent verification or to assume
responsibility for the accuracy, completeness, or fairness of the information in this Official Statement.
TRANSCRIPT AND CLOSING STATEMENTS
A complete transcript of proceedings and a no-litigation certificate (described above under
"LITIGATION AND INSURANCE") will be delivered by the City when the Bonds are delivered. The City
will at that time also provide a certificate of the City relating to the accuracy and completeness of this Official
Statement.
37
TAX EXEMPTION
General
In the opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Bond Counsel, to be delivered at the
time of original issuance of the Bonds, under existing laws, regulations rulings and judicial decisions, and
assuming compliance with covenants described herein, interest on Bonds is excludable from gross income for
federal income tax purposes and is not a specific preference item for purposes of the federal alternative
minimum tax for individual corporations. Bond Counsel is also of the opinion, based on existing laws of the
State of New Mexico as enacted and construed, that interest on the Bonds is excludable from net income for
present State of New Mexico income tax purposes.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes various restrictions,
conditions and requirements relating to the exclusion from gross income for federal tax purposes of interest
on obligations such as the Bonds. The City has made various representations and warranties with respect to,
and has covenanted in the Bond Ordinance and other documents, instruments and certificates to comply with
the applicable provisions of the Code to assure that interest on the Bonds will not become includible in gross
income. Failure to comply with these covenants or the inaccuracy of these representations and warranties
may result in interest on the Bonds being included in gross income from the date of issue of the Bonds. The
opinion of Bond Counsel assumes compliance with the covenants and the accuracy of such representations
and warranties.
Although Bond Counsel has opined that interest on the Bonds is not a specific preference item for
purposes of the alternative minimum tax provisions contained in the Code, interest on the Bonds will be
included in the adjusted current earnings of certain corporations, and such corporation's adjusted current
earnings over its alternative minimum taxable income (determined without regard to this adjustment and prior
to reduction for certain net operating losses).
Although Bond Counsel has rendered an opinion that interest on the Bonds is excludable from gross
income for federal income tax purposes, the accrual or receipt of interest on the Bonds may otherwise affect
the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon
the recipient's particular tax status or other items of income or deduction. Bond Counsel expresses no opinion
regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations
(including S corporations and foreign corporations operating branches in the United States), property or
casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social
Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit or
taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt
obligations are advised to consult their tax advisors as to the tax consequences of purchasing or owning the
Bonds.
The opinions expressed by Bond Counsel are based upon existing law as of the date of issuance and
delivery of the Bonds, and Bond Counsel expresses no opinion as of any date subsequent thereto or with
respect to any pending legislation.
From time to time, there are legislative proposals in Congress that, if enacted, could alter or amend
the federal tax matters referred to above or adversely affect the market value of the Bonds. It cannot be
predicted whether or in what form any such proposal might be enacted or whether if enacted, it would apply
to Bonds issued prior to enactment. Each purchaser of the Bonds should consult his or her own tax advisor
regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any
pending or proposed federal tax legislation.
38
Qualified Tax-Exempt Obligations.
The City has designated the Bonds as qualified tax-exempt bonds for purposes of Section 265 of the
Code. Qualified tax-exempt bonds are bonds issued by a qualified small issuer. A qualified small issuer was
defined as an issuer who did not reasonably anticipate the amount of its tax-exempt bonds (other than certain
private activity bonds) would exceed $10,000,000 in a calendar year.
The Code generally provides that a financial institution may not deduct that portion of its interest
expense which is allocable to tax-exempt interest. The interest expense which is allocable to tax-exempt
interest is an amount which bears the same ratio to the institution's interest expense as the institution's average
adjusted basis of tax-exempt obligations acquired after August 7, 1986 bears to the average adjusted basis of
all assets of the institution. Tax exempt obligations may be treated as acquired on August 7, 1986 (and
therefore are not subject to this rule) if they are "qualified tax-exempt obligations" as defined in the Code and
are designated for this purpose by the issuer. Under provisions of the Code dealing with financial institution
preference items, certain financial institutions, including banks, are denied 20% of their otherwise allowable
deduction for interest expense with respect to obligations incurred or continued to purchase or carry the
Bonds. In general, interest expense with respect to obligations incurred or continued to purchase or carry the
Bonds will be in an amount which bears the same ratio as the institution's average adjusted basis in the Bonds
bears to the average adjusted basis of all assets of the institution.
Amendments to the Code could be enacted in the future and there is no assurance that any such future
amendments which may be made to the Code will not adversely affect the ability of banks or other financial
institutions to deduct any portion of its interest expense allocable to tax-exempt interest. Holders of Bonds
should consult their tax advisors regarding the deduction of interest related to debt incurred to purchase or
carry the Bonds.
Internal Revenue Service Audit Program
The Internal Revenue Service (the" Service") has an ongoing program auditing tax-exempt
obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is
includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be
given as to whether the Service will commence an audit of the Bonds. If an audit is commenced, under
current procedures the Service will treat the City as the taxpayer and the Bond owners may have no right to
participate in such procedure. Neither the Financial Advisor, the initial purchasers of the Bonds nor Bond
Counsel is obligated to defend the tax-exempt status of the Bonds. The City has covenanted in the Bond
Ordinance not to take any action that would cause the interest on the Bonds to become includable in gross
income except to the extent described above for the owners thereof for federal income tax purposes. None of
the City, the Financial Advisor, the initial purchasers of the Bonds or Bond Counsel is responsible to pay or
reimburse the costs of any Bond owner with respect to any audit or litigation relating to the Bonds.
Original Issue Discount
The Bonds may be offered at a discount ("original issue discount") equal generally to the difference
between public offering price and principal amount. For federal income tax purposes, original issue discount
on a bond accrues periodically over the term of the bond as interest with the same tax exemption and
alternative minimum tax status as regular interest. The accrual of original issue discount increases the
holder's tax basis in the bond for determining taxable gain or loss from sale or from redemption prior to
maturity. Holders of Bonds offered at an original issue discount should consult their tax advisors for an
explanation of the accrual rules.
39
Original Issue Premium
The Bonds may be offered at a premium ("original issue premium") over their principal amount. For
federal income tax purposes, original issue premium is amortizable periodically over the term of a bond
through reductions in the holders' tax basis in the bond for determining taxable gain or loss from sale or from
redemption prior to maturity. Amortizable premium is accounted for as reducing the tax-exempt interest on
the bond rather than creating a deductible expense or loss. Holders of Bonds offered at an original issue
premium should consult their tax advisors for an explanation of the amortization rules.
FINANCIAL STATEMENTS
The general purpose financial statements of the City as of June 30, 2011, and for the year then ended,
contained in Appendix A to this Official Statement, have been audited by Hinkle & Landers, P.C., Certified
Public Accountants, Albuquerque, New Mexico, as set forth in their report thereon included in Appendix A
hereto. Hinkle & Landers, P.C. has not been engaged to perform, and has not performed since June 30, 2011,
any procedures on the financial statements shown in the excerpt. Further, Hinkle & Landers, P.C. has not
been engaged to perform and has not performed any procedures relating to financial information or any other
information contained in this Official Statement. Copies of the City's comprehensive annual financial report
may be requested from the City's Finance Department, 321 North Connelly, New Mexico 88101. The
financial statements are included for informational purposes only.
LEGAL MATTERS
Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, New Mexico, as Bond Counsel, will
render an opinion with respect to the validity of the Bonds and will render the opinions described above under
"TAX EXEMPTION." The proposed form of such opinion is attached hereto as Appendix B. Modrall,
Sperling, Roehl, Harris & Sisk, P.A., has also acted as Special Counsel to the City in connection with the
preparation of the Official Statement. The fees of Bond Counsel and Special Counsel are contingent upon the
issuance and delivery of the Bonds.
RATINGS
The Bonds have been assigned a rating of "_________" from Moody's Investors Services
("Moody's"). An explanation of the significance of such ratings may be obtained from Moody’s.
Such rating reflects only the view of Moody's. The rating is not a recommendation to buy, sell or
hold the Bonds and there is no assurance that the rating will not be revised downward or withdrawn entirely
by the rating agency, if, in its judgment, circumstances so warrant. Any downward revision or withdrawal of
such rating may have an effect on the market price of the Bonds.
CONTINUING DISCLOSURE
The City will enter into an undertaking (the "Undertaking") for the benefit of the holders of the Bonds
to provide certain financial information and operating data and to provide notice of certain events, pursuant to
the requirements of section (b)(5)(i) of Rule 15c2-12 of the Securities and Exchange Commission (17 C.F.R.
§ 240.15c2-12). A failure by the City to provide any information required thereunder shall not constitute an
Event of Default under the Bond Ordinance. The City has previously entered into continuing disclosure
undertaking with respect to certain other obligations of the City in accordance with Section Rule 15c2-12 and,
during the last five years, the City has complied in all material respects.
40
ADDITIONAL INFORMATION
All of the summaries of the statutes, ordinances, resolutions, opinions, contracts, agreements,
financial and statistical data, and other related reports described in this Official Statement are subject to the
actual provisions of such documents. The summaries do not purport to be complete statements of such
provisions and reference is made to such documents, copies of which are either publicly available or available
for inspection during normal business hours at the offices of the City Clerk of the City of Clovis, 321 North
Connelly, Clovis, New Mexico 88101, or at the offices of RBC Capital Markets, LLC, 6301 Uptown Blvd.
NE, Suite 110, Albuquerque, New Mexico 87110.
41
OFFICIAL STATEMENT CERTIFICATION
As of the date hereof, to my knowledge and belief, this Official Statement is true, complete and
correct in all material respects, and does not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made herein, in light of the circumstances under which
they are made, not misleading.
The preparation of this Official Statement and its distribution have been authorized by the Clovis City
Commission.
CITY OF CLOVIS, NEW MEXICO
By:
David Lansford, Mayor
ATTEST:
LeighAnn Melancon, City Clerk
Y:\dox\client\85381\0001\GENERAL\W1738793.DOC
42
APPENDIX A
EXCERPTS FROM AUDITED FINANCIAL STATEMENTS OF THE
CITY OF CLOVIS, NEW MEXICO
FOR THE YEAR ENDING JUNE 30, 2011
A-1
STATE OF NEW MEXICO
CITY OF CLOVIS
FINANCIAL STATEMENTS
For The Year Ended June 30 2011
INTRODUCTORY SECTION
STATE OF NEW MEXICO
CITY OF CLOVIS
Table of Contents
For the Year Ended June 30, 2011
Page
INTRODUCTORY SECTION
Table of Contents
Official Roster
i-iii
1
FINANCIAL SECTION
Independent Auditors' Report
Management’s Discussion and Analysis
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets
Statement of Activities
Fund Financial Statements:
Balance Sheet – Governmental Funds
Reconciliation of the Balance Sheet to the Statement
of Net Assets
Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds
Reconciliation of the Statement of Revenues,
Expenditures and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Budget (Non-GAAP Budgetary Basis)
and Actual – General Fund
Statement of revenues and expenditures – budget and
actual non-GAAP budgetary basis– special revenue
funds – Eastern NM Rural Water Special Revenue Fund
Statement of Net Assets – Proprietary Funds
Statement of Revenues, Expenses, and Changes in
Fund Net Assets – Proprietary Funds
Statement of Cash Flows – Proprietary Funds
Statement of Fiduciary Assets and Liabilities – Agency Funds
Notes to the Financial Statements
SUPPLEMENTAL INFORMATION
Combining and Individual Fund Statements and Schedules:
Nonmajor Fund Descriptions
Combining balance sheet – non-major governmental funds
Combining statement of revenues, expenditures, and changes
in fund balances – non-major governmental funds
Combining Balance Sheet – Nonmajor Funds
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances – Nonmajor Funds
Schedule of Changes in Fiduciary Assets and Liabilities –
Agency Funds
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Budget (Non-GAAP Budgetary Basis)
and Actual:
Municipal Road Special Revenue Fund
Recreation Special Revenue Fund
Older Adults Division Special Revenue Fund
Environmental Tax Special Revenue Fund
i
2-3
4-9
10-11
12
13
14
15
16
17
18
19
20
21-22
23
24-47
48-50
51
52
53-59
60-66
67
68
69
70
71
STATE OF NEW MEXICO
CITY OF CLOVIS
Table of Contents
For the Year Ended June 30, 2011
Page
Statement of Revenues, Expenditures, and Changes in
Fund Balance – Budget (Non-GAAP Budgetary Basis)
and Actual:
Fire Equipment Special Revenue Fund
Sanitary Sewer Improvement Special Revenue Fund
Ned Houk Park Special Revenue Fund
Carver Library Special Revenue Fund
Golf Course Fund
Infrastructure Improvement Special Revenue Fund
Special Parks Improvement Special Revenue Fund
Civic Center Special Revenue Fund
Special Designated Special Revenue Fund
Economic Development Special Revenue Fund
Capital Outlay Gross Receipts Tax Special Revenue Fund
Emergency Medical Services Special Revenue Fund
Special Streets Special Revenue Fund
Recycling Special Revenue Fund
Lodger’s Tax Special Revenue Fund
Stimulus Funding Special Revenue Fund
Special Fire & Police Special Revenue Fund
Local Government Corrections Special Revenue Fund
Law Enforcement Protection Special Revenue Fund
Area Agency on Aging Special Revenue Fund
Clovis Area Transit Special Revenue Fund
Department of Justice Special Revenue Fund
Drug Control Special Revenue Fund
Drainage Improvement Debt Service Fund
Civic Center Debt Service Fund
Parks & Infrastructure Debt Service Fund
Street Construction Capital Projects Fund
Drainage Improvement Capital Projects Fund
Statement of Revenues, Expenditures and Change in Net
Assets – Budget (Non-GAAP Budgetary Basis) and Actual
Solid Waste Enterprise Fund
Wastewater Enterprise Fund
Airport Enterprise Fund
Internal Service Fund Descriptions
Combining Balance Sheet – Internal Service Funds
Statement of Revenues, Expenses and Changes in Fund Net
Assets – Internal Service Funds
Statement of Cash Flows – Internal Service Funds
Statement of Revenues, Expenditures and Changes in Net
Assets – Budget (Non-GAAP Budgetary Basis) and Actual:
Workers Compensation Internal Service Fund
Unemployment Reserve Internal Service Fund
Property and Liability Self-Insurance Internal Service Fund
Schedule of Expenditures of Federal Awards
OTHER SUPPLEMENTAL INFORMATION
Schedule of Fund Balances
Schedule of Joint Powers Agreements
Schedule of Pledged Collateral By Bank and Account
ii
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110-111
112
113-114
115-116
STATE OF NEW MEXICO
CITY OF CLOVIS
Table of Contents
For the Year Ended June 30, 2011
Page
COMPLIANCE SECTION
Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards
117-118
FEDERAL FINANCIAL ASSISTANCE
Report on Compliance with Requirements That Could Have
A Direct and Material Effect On Each Major Program
and On Internal Control Over Compliance In Accordance
With OMB Circular A-133
Schedule of Findings and Questioned Costs
119-120
121-122
OTHER DISCLOSURES
123
iii
STATE OF NEW MEXICO
CITY OF CLOVIS
Official Roster
As of June 30, 2011
City Officials
Name
Title
Gayla Brumfield
Mayor
Chris Bryant
City Commissioner – District 4
Randy Crowder
City Commissioner – District 1
Juan F. Garza
City Commissioner – District 1
Fidel Madrid
City Commissioner – District 3
Robert Sandoval
City Commissioner – District 3
Dan Stoddard
City Commissioner – District 4
Fred Van Soelen
City Commissioner – District 2
Len Vohs
Mayor Pro-Tem, City Commissioner – District 2
Administrative Officials
Joe Thomas
City Manager
Don Clifton
Director of Budget and Internal Operations
Leigh Ann Melancon
Finance Director
1
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT
Hector Balderas
New Mexico State Auditor
The Office of Management and Budget
To the City Manager and City Commission
The City of Clovis
Clovis, New Mexico
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, each major fund, the aggregate remaining fund information,
and the budgetary comparison for the general fund and special revenue funds of the City of Clovis (City) as of and
for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements as listed in the
table of contents. We also have audited the financial statements of each of the City’s nonmajor governmental
funds, internal service funds, each fiduciary fund, and the budgetary comparisons for the major capital project
fund, debt service funds, proprietary funds, and the remaining nonmajor funds presented as supplemental
information in the accompanying combining and individual fund financial statements as of and for the year ended
June 30, 2011 as listed in the table of contents. These financial statements are the responsibility of City’s
management. Our responsibility is to express opinions on these financial statements based on our audit. We did
not audit the financial statements of the City of Clovis Housing and Redevelopment Agency, Inc, a discreetly
presented component unit of the City, which represents 100 percent of the assets, net assets, and revenues of the
discreetly presented component units of the City. Those financial statements were audited by other auditors
whose report thereon has been furnished to us, and our opinion, insofar as it related to the amounts included for
discreetly presented component units is based on the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
City’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit and the report of the other
auditors provides a reasonable basis for our opinions.
In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above
present fairly, in all material respects, the respective financial position of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund and the aggregate remaining
fund information of the City of Clovis, as of June 30, 2011, and the respective changes in financial position, and
cash flows, where applicable, thereof and the budgetary comparisons for the General Fund and major special
revenue funds for the year then ended in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all
material respects, the respective financial position of each nonmajor governmental fund, internal service fund and
fiduciary fund of the City as of June 30, 2011, and the respective changes in financial position and cash flows,
where applicable, thereof and the respective budgetary comparisons for the major capital project fund, debt
service funds, proprietary funds, and the remaining nonmajor funds for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
As described in Note 1 to the financial statements, the County implemented Governmental Accounting Standards
Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.
2
November 29, 2011,
Independent Auditors’ Report, continued
In accordance with Government Auditing Standards, we have also issued our report dated November 29, 2011 on
our consideration of the City’s internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
The Management’s Discussion and Analysis on pages 4 through 9 is not a required part of the basic financial
statements but is supplementary information required by accounting principles generally accepted in the United
States of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements, the combining and individual fund financial statements, and the
budgetary comparisons. The accompanying Schedule of Expenditures of Federal Awards is presented for
purposes of additional analysis as required by the U. S. Office of Management and Budget Circular A-133, Audits
of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial
statements. The accompanying financial information listed as “other supplemental information” in the table of
contents is presented for purposes of additional analysis and is not a required part of the financial statements of
the City of Clovis, New Mexico. Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements, and each of the City’s nonmajor governmental funds and internal service
funds financial statements and, in our opinion, based on our audit and the report of the other auditors, is fairly
stated, in all material respects, in relation to the basic financial statements, taken as a whole. The introductory
section has not been subjected to the auditing procedures applied by us and the other auditors in the audit of the
basic financial statements, and accordingly, we express no opinion on it.
Hinkle + Landers, PC
Albuquerque, New Mexico
November 29, 2011
3
STATE OF NEW MEXICO
CITY OF CLOVIS
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
As management of the City of Clovis, we offer the readers of the City of Clovis financial statements this narrative
overview and analysis of the financial activities of the City of Clovis for the fiscal year ended June 30, 2011. We
encourage readers to consider the information presented here in conjunction with the financial statements of the
City of Clovis and additional information provided.
Financial Highlights
x
x
x
x
x
The assets of the City of Clovis exceeded its liabilities at the close of the most recent fiscal year by
$137,466,516 (net assets). Of this amount, $34,874,026 (unrestricted net assets) may be used to meet the
government’s ongoing obligations to citizens and creditors.
The government’s total net assets increased by $8,131,604. The majority of this increase is due to the
increase in current assets.
As of the close of the current fiscal year, the City of Clovis’ governmental funds reported combined ending
fund balances of $24,281,849, an increase of $2,910,777 in comparison with the prior year.
At the end of the current fiscal year, the unassigned fund balance for the general fund was $8,054,779 or
40 percent of total general fund expenditures.
The City of Clovis’ total debt increased by $5,300,645 (35 percent), during the current fiscal year. The key
factor in this increase was a $7,000,000 gross receipts tax bond issue for Wastewater Improvements.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City of Clovis’ basic financial
statements. The City of Clovis’ basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also
contains other supplementary information in addition to the basic financial statements themselves.
Government-wide financial statements. The government-wide financial statements are designed to provide
readers with a broad overview of the City of Clovis’ finances, in a manner similar to a private-sector business.
The statement of net assets presents information on all of the City of Clovis’ assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a
useful indicator of whether the financial position of the City of Clovis is improving or deteriorating.
The statement of activities presents information showing how the government’s net assets changed during the
most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the
change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this
statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and
earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Clovis that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-type
activities). The governmental activities of the City of Clovis include general government, public safety, public
works, and culture and recreation. The business-type activities of the City of Clovis include an airport, solid waste
and wastewater.
The government-wide financial statements can be found on pages 10 and 11 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over
resources that have been segregated for specific activities or objectives. The City of Clovis, like other state and
local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the City of Clovis can be divided into two categories: governmental funds and
proprietary funds.
4
STATE OF NEW MEXICO
CITY OF CLOVIS
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-wide
financial statements, governmental fund financial statements focus on near-term inflows and outflows of
spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a
government’s near-term financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is
useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better
understand the long-term impact of the government’s near term financing decisions. Both the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City of Clovis maintains thirty-three individual governmental funds. Information is presented separately in
the governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balances for
the general, which is considered to be a major fund. Data from the other thirty-two governmental funds are
combined into a single, aggregated presentation. Individual fund data for each of the nonmajor governmental
funds is provided in the form of combining statements elsewhere in this report.
The City of Clovis adopts an annual appropriated budget for its general fund and all other governmental funds. A
budgetary comparison statement has been provided for the general fund to demonstrate compliance with this
budget. In addition, the individual financial statement of the remaining governmental fund types include
budgetary comparison date.
The basic governmental fund financial statements can be found on pages 13 thru 16 of this report.
Proprietary funds. The City of Clovis maintains two types of proprietary funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial statements. The
City of Clovis uses enterprise funds to account for its airport, solid waste, and wastewater funds. Internal Service
Funds accounts for workers compensation and unemployment insurance services provided to other departments
of the government. Services are provided on a cost reimbursement basis.
Proprietary funds provide the same type of information as the government-wide financial statements, only in
more detail. The proprietary fund financial statements provide separate information for the solid waste,
wastewater, and airport, all of which are considered major funds of the City of Clovis.
The basic proprietary fund financial statements can be found on pages 19 thru 22 of this report
Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to the
financial statements can be found on pages 24 thru 47 of this report.
Other Information. The combining statements referred to earlier in connection with nonmajor governmental
funds are presented immediately following the notes to the financial statements. Combining and individual fund
statements and schedules can be found on pages 48 thru 109 of the report.
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the
case of the City of Clovis, assets exceeded liabilities by $137,466,516 at the close of the most recent fiscal year.
The largest portion of the City of Clovis’ net assets (73 percent) reflect its investment in capital assets (e.g. land,
buildings, machinery and equipment), less any related debt used to acquire those assets that is still outstanding.
The City of Clovis uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City of Clovis’ investment in its capital assets is reported net of related
5
STATE OF NEW MEXICO
CITY OF CLOVIS
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
City of Clovis
Net Assets
(In thousands)
Current and other assets
Governmental Activities
June 30,
June 30,
2011
2010
$
29,011
26,731
Capital assets, net of
accumulated depreciation
Total assets
Long-term liabilities
outstanding
Other Liabilities
Business-type
Activities
June 30,
June 30,
2011
2010
15,904
9,781
Total
June 30,
June 30,
2011
2010
44,915
36,512
73,553
72,790
46,954
42,208
120,507
114,998
102,564
99,521
62,858
51,989
165,422
151,510
4,682
2,481
5,326
3,341
16,701
4,091
10,963
2,546
21,383
6,572
16,289
5,887
Total liabilities
$
7,163
8,667
20,792
13,509
27,955
22,176
Net assets
$
95,401
90,854
42,066
38,480
137,467
129,334
An additional portion of the City of Clovis’ net assets of $2,398,890 (2 percent) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets
$34,874,026 may be used to meet the government’s ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City of Clovis is able to report positive balances in all three categories of
net assets, both for the government as a whole as well as for its separate governmental and business-type
activities. The same situation held true for the prior fiscal year.
There was a net increase of $12,972,257 in capital assets reported. The majority of this increase resulted from the
acquisition of vehicles and equipment and the completion of on-going building construction in progress.
Governmental activities. Governmental activities increased the City of Clovis’ net assets by $4,545,751. Key
elements of this increase are as follows:
x The total expenses for governmental activities increased by $3,029,358 due primarily to an increase in
public works expenditures, while revenues increased $2,212,968 due mainly to increased tax revenue.
x The gross receipts tax revenue increased $1,385,635.
Business-type activities. Business-type activities increased the City of Clovis’ net assets by $3,585,853.
x Revenue increased $3,202,838 due to an increase in grant revenues. Expenses experienced an increase of
$548,591 during the year primarily due to an increase in cost of operations and capital outlay in
Wastewater, Solid Waste and Airport.
6
STATE OF NEW MEXICO
CITY OF CLOVIS
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
City of Clovis
Comparison of Key Elements
(In thousands)
Governmental
Activities
June 30,
June 30,
2011
2010
Revenues
Taxes
Intergovenmental
Charges for services
Other
$
Total revenue
Expenses
General government
Public safety
Public works
Culture and recreation
Health and welfare
Interest on long-term debt
Solid waste
Wastewater
Airport
Total expenses
Transfers
Change in net assets
Total
June 30,
June 30,
2011
2010
26,637
8,057
2,541
3,866
24,495
9,208
2,205
2,980
465
3,255
7,022
629
437
351
6,525
856
27,102
11,312
9,563
4,495
24,932
9,559
8,730
3,836
41,101
38,888
11,371
8,169
52,472
47,057
6,440
14,478
8,824
5,138
809
176
-
5,730
14,639
6,581
4,441
1,247
198
-
4,544
3,096
835
4,461
2,807
659
6,440
14,478
8,824
5,138
809
176
4,544
3,096
835
5,730
14,639
6,581
4,441
1,247
198
4,461
2,807
659
35,865
32,836
8,475
7,927
44,340
40,763
690
279
-
-
3,586
521
8,132
6,294
(690)
$
Business-type
Activities
June 30,
June 30,
2011
2010
4,546
(279)
5,773
Financial Analysis of the Government’s Funds
As noted earlier, the City of Clovis uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements.
Governmental funds. The focus of the City of Clovis’ governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of
Clovis’ financing requirements. In particular, unassigned fund balance may serve as a useful measure of a
government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City of Clovis’ governmental funds reported combined ending fund
balances of $24,281,849, an increase of $2,910,777 in comparison with the prior year. Approximately 32 percent
of this total amount, $7,881,461, constitutes unassigned fund balance, which is available for spending at the
government’s discretion. Of the remainder, $685,350 is non-spendable as it is for inventory and prepaid
expenses.
The general fund is the chief operating fund of the City of Clovis. At the end of the current fiscal year, unassigned
fund balance of the general fund was $8,054,779 and represents 40 percent of total general fund expenditures.
The fund balance of the City of Clovis’ general fund increased by $1,045,539 during the current fiscal year.
7
STATE OF NEW MEXICO
CITY OF CLOVIS
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
Proprietary funds. The City of Clovis’ proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
General Fund Budgetary Highlights
There were no major differences between the original budget and the final amended budget.
Detailed budget performance is examined through the Statement of Revenues, Expenditures and Changes in Fund
Balance for the general fund found on page 17. Actual general fund expenditures were $2,301,226 less than the
final budget amount (favorable variance). This was due primarily to the police department (public safety
component) favorable variance of $1,240,259.
Capital Asset and Debt Administration
Capital assets. The City of Clovis’ amount invested in capital assets for its governmental and business type
activities as of June 30, 2011, amounts to $120,506,405 (net of accumulated depreciation). This investment in
capital assets includes land, land improvements, buildings, computers, equipment, furniture and fixtures,
vehicles, infrastructure and zoo.
City of Clovis
Capital Assets
(In thousands)
Governmental
Business-type
Activities
Activities
June 30,
June 30,
June 30,
June 30,
2011
2010
2011
2010
Total
June 30,
2011
June 30,
2010
Land
Land improvements
Buildings and improvements
Equipment and vehicles
Infrastructure
Construction in progress
$
3,030
8,048
17,904
7,620
35,177
1,773
3,020
6,388
18,435
7,681
33,090
4,176
4,867
5,789
6,524
2,905
20,747
6,121
4,138
6,043
6,868
3,465
19,893
1,801
7,897
13,837
24,428
10,525
55,924
7,894
7,158
12,431
25,303
11,146
52,983
5,977
Net capital assets
$
73,552
72,790
46,953
42,208
120,505
114,998
Additional information on the City of Clovis’ capital assets can be found in Note 6 on pages 35-37 of this report.
Long-term debt. At the end of the current fiscal year, the City of Clovis had total debt from outstanding bonds
of $10,400,000 and loans and notes outstanding of $9,912,805.
City of Clovis
Long-term Debt
(In thousands)
Governmental
Activities
June 30,
June 30,
2011
2010
Revenue bonds
Notes payable
Business-type
Activities
June 30,
June 30,
2011
2010
Total
June 30,
June 30,
2011
2010
$
3,640
1,317
4,205
1,390
6,760
8,596
8,013
1,404
10,400
9,913
12,218
2,794
$
4,957
5,595
15,356
9,417
20,313
15,012
8
STATE OF NEW MEXICO
CITY OF CLOVIS
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
Additional information on the City of Clovis’ long-term debt can be found in Note 7 on pages 37-41 of this report.
Economic Factors and Next Year’s Budget
City of Clovis is located in Curry County. Curry County, like the rest of urban New Mexico, has a strong and
balanced economy. Employment in the area has been stable for the past three years.
City of Clovis receives approximately 66 percent of its annual operating budget for general fund from gross
receipts taxes.
Request for Information
This financial report is designed to provide a general overview of the City of Clovis’ finances for all those with an
interest in the government’s finances. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to the Office of the Finance Director, City of
Clovis, P.O. Box 760, Clovis, New Mexico 88101. See Note 1 for requests for information in the separate financial
statements of the component unit.
9
BASIC
FINANCIAL STATEMENTS
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Net Assets
As of June 30, 2011
Governmental
Activities
Assets
Current assets
Cash and investments
Receivables:
Property taxes receivable
Intergovernmental
Other receivables
Customer receivables
Notes receivable
Prepaids
Inventory
Internal balances
$
105,793
4,977,558
1,436,131
619,059
66,872
232,805
Total current assets
Noncurrent assets
Restricted cash and investments
Notes receivable, noncurrent portion
Bond discounts, net of
amortization of $8,055
Bond issuance costs, net of
amortization of $16,535
Capital assets
Less: accumulated depreciation
Total noncurrent assets
Total assets
21,515,853
$
Primary Government
Business-type
Activities
13,305,979
549,033
815,765
90,819
70,207
(232,805)
Total
Component
Units
34,821,832
1,707,070
105,793
5,526,591
1,436,131
815,765
709,878
137,079
-
4,631
46,210
10,486
-
28,954,071
14,598,998
43,553,069
1,768,397
-
1,304,919
1,304,919
480,117
-
18,795
-
18,795
-
38,582
129,266,739
(55,714,068)
82,285,484
(35,331,750)
38,582
211,552,223
(91,045,818)
7,425,858
(5,242,346)
73,610,048
48,258,653
121,868,701
2,663,629
102,564,119
62,857,651
165,421,770
4,432,026
The accompanying notes are an integral part of the financial statements.
10
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Net Assets (continued)
As of June 30, 2011
Governmental
Activities
Liabilities
Current liabilities
Accounts payable
Accrued payroll expenses
Accrued compensated absences
Accrued interest
Meter and other refundable deposits
Deferred revenue
Current portion of bonds and notes payable
$
Total current liabilities
Noncurrent liabilities
Accrued compensated absences
Meter and other refundable deposits
Landfill closure liability
Bond premium, net of
amortization of $309
Bonds and notes payable
Total noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets,
net of related debt
Restricted for:
Debt service
Capital projects and improvements
Other purposes
Unrestricted
Total net assets
Total liabilities and net assets
$
Primary Government
Business-type
Activities
Total
Component
Units
129,951
826,305
712,049
12,844
131,383
10,496
658,277
1,355,286
117,206
169,535
29,840
1,304,919
1,114,222
1,485,237
943,511
881,584
42,684
131,383
1,315,415
1,772,499
30,087
35,809
11,738
13,321
-
2,481,305
4,091,008
6,572,313
90,955
383,411
-
2,447,480
383,411
2,447,480
2,255
71,197
-
4,299,005
4,682,416
11,744
14,241,301
16,700,525
11,744
18,540,306
21,382,941
73,452
7,163,721
20,791,533
27,955,254
164,407
68,595,389
31,598,211
100,193,600
2,183,512
225,715
1,605,321
567,854
24,406,119
10,467,907
225,715
1,605,321
567,854
34,874,026
395,599
1,688,508
95,400,398
42,066,118
137,466,516
4,267,619
102,564,119
62,857,651
165,421,770
4,432,026
The accompanying notes are an integral part of the financial statements.
11
$
$
3,052,728
4,544,690
3,095,728
834,862
8,475,280
44,340,523
6,439,558
14,477,546
8,824,049
5,138,476
809,131
176,483
35,865,243
Expenses
General Revenues:
Taxes
Property taxes, levied for general purposes
Gross receipts taxes
Gasoline and motor vehicle taxes
Franchise taxes
Cigarette and lodger's taxes
Licenses and fees
Fines, forfeitures, and penalties
Investment income
Miscellaneous income
Gain/(loss) on sale of capital assets
Transfers
Total general revenues and transfers
Change in net assets
Beginning net assets
Restatement
Beginning net assets as restated
Ending net assets
Component Units:
Housing Authority
Business-type Activities:
Solid Waste
Wastewater
Airport
Total business type activities
Total Primary Government
Primary Government
General government
Public safety
Public works
Culture and recreation
Health and welfare
Interest on long-term debt
Total governmental activities
Functions/Programs
3,114,717
5,420,083
2,886,754
1,518,520
350,690
664,119
5,420,083
Operating
Grants and
Contributions
362,550
4,250
728,661
2,522,021
3,254,932
5,891,768
2,636,836
2,636,836
Capital Grants
and
Contributions
$
$
1,622,346
22,669,543
558,791
1,239,375
546,923
538,338
435,636
73,951
2,995,923
(178,112)
(689,610)
29,813,104
4,545,751
90,854,647
90,854,647
95,400,398
-
(25,267,353)
(3,434,791)
(10,861,852)
(6,187,213)
(4,503,027)
(103,987)
(176,483)
(25,267,353)
464,843
189,112
455,591
(15,234)
689,610
1,783,922
3,585,853
38,480,265
38,480,265
42,066,118
-
(673,429)
650,608
1,824,752
1,801,931
1,801,931
-
1,622,346
23,134,386
558,791
1,239,375
546,923
538,338
435,636
263,063
3,451,514
(193,346)
31,597,026
8,131,604
129,334,912
129,334,912
137,466,516
-
(673,429)
650,608
1,824,752
1,801,931
(23,465,422)
(3,434,791)
(10,861,852)
(6,187,213)
(4,503,027)
(103,987)
(176,483)
(25,267,353)
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Business
Governmental
Type
Activities
Activities
Total
The accompanying notes are an integral part of these financial statements.
12
324,758
3,867,011
3,017,675
137,593
7,022,279
9,563,250
118,013
2,097,174
284,759
41,025
2,540,971
Charges for
Services
Program Revenues
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Activities
For the Year Ended June 30, 2011
1,971
62,251
(290)
813,229
813,229
3,454,390
3,454,390
4,267,619
749,297
-
-
Component Unit
STATE OF NEW MEXICO
CITY OF CLOVIS
Balance Sheet
Governmental Funds
As of June 30, 2011
01, 18
General Fund
Assets
Cash and investments
Restricted cash and investments
Receivables:
Property taxes
Intergovernmental
Other receivables
Inventory
Prepaid insurance
Due from other funds
Cap Projects
Eastern NM
Rural Water
Street
Construction
87
Other
Non-Major
Governmental
Funds
Total
4,193,059
-
108,667
334,608
12,704,857
658,938
16,897,916
1,102,213
105,793
2,574,189
162,429
6,247
356,656
2,028,289
1,260,236
-
395,373
-
1,986,387
35,074
60,626
261,821
-
105,793
6,216,185
197,503
66,873
618,477
2,028,289
$
9,426,662
1,368,903
729,981
15,707,703
27,233,249
$
105,392
694,233
131,383
67,476
10,496
-
1,238,628
-
24,558
122,377
556,857
129,950
816,610
131,383
67,476
10,496
1,795,485
Total liabilities
1,008,980
1,238,628
-
703,792
2,951,400
Fund balances
Nonspendable
Restricted
Committed
Assigned
Unassigned
362,903
8,054,779
108,667
21,608
729,981
-
322,447
684,902
11,639,515
2,551,973
(194,926)
685,350
1,523,550
11,639,515
2,551,973
7,881,461
Total fund balances
8,417,682
130,275
729,981
15,003,911
24,281,849
9,426,662
1,368,903
729,981
15,707,703
27,233,249
Total assets
Liabilities and fund balances
Liabilities
Accounts payable
Accrued payroll expenses
Other accrued expenses
Accrued compensated absences
Deposits held in trust
Deferred property tax revenue
Other deferred revenue
Due to other funds
Total liabilities and fund balances
$
Major Funds
36+38+93
94+97+99
Spec Revenue
$
The accompanying notes are an integral part of these financial statements.
13
STATE OF NEW MEXICO
CITY OF CLOVIS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE
TO STATEMENT OF NET ASSETS
As of June 30, 2011
Amounts reported for governmental activities in the statement of
net assets are different because:
Fund balances - total governmental funds
$
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the funds
24,281,849
73,520,803
Delinquent property taxes not collected within sixty days after year end are not considered
"available" revenues and are considered to be deferred revenue in the fund financial statements,
but are considered revenue in the Statement of Activities
67,476
Other long-term assets are not available to pay for current period expenditures and therefore, are
deferred in the funds:
Bond discounts
Bond issuance costs
18,795
38,582
Other liabilities are not due and payable in the current period and, therefore, are not reported in the
funds:
Accrued interest
(12,844)
Internal service funds assets and liabilities included governmental activities in the statement of net
assets
3,535,822
Long-term liabilities, including bonds payable, are not due and payable in the current period and,
therefore, are not reported in the funds
Current accrued compensated absences
Noncurrent accrued compensated absences
Current bonds and notes payable
Bonds payable
Differences due to rounding
Net assets of governmental activities
The accompanying notes are an integral part of these financial statements.
14
(709,391)
(383,411)
(658,277)
(4,299,005)
(1)
$
95,400,398
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2011
01, 18
General Fund
Revenues:
Taxes:
Property
Gross receipts
Gasoline and motor vehicle
Other
Intergovernmental:
Federal operating grants
Federal capital grants
State operating grants
State capital grants
Charges for services
Fines, forfeitures, and penalties
Licenses and fees
Investment income
Miscellaneous
Total revenues
$
Expenditures:
Current:
General government
Public safety
Public works
Culture and recreation
Health and welfare
Capital outlay
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses)
Transfers in/(out)
Proceeds from sale of capital asset
Proceeds from debt issuance
Total other financing sources (uses)
Net change in fund balance
Beginning fund balance
Ending fund balance
$
Major Funds
36+38+93
94+97+99
Spec Revenue
Cap Projects
Eastern NM
Rural Water
Street
Construction
Other
Non-major
Governmental
Funds
87
Total
1,613,698
13,773,220
26,863
1,243,943
-
-
8,896,321
531,928
542,356
1,613,698
22,669,541
558,791
1,786,299
184,181
9,849
2,336,319
157,626
463,502
23,447
503,120
20,335,768
388,528
2,089,164
2,477,692
473,138
2,023,898
2,890
9,761
2,509,687
1,240,315
428,707
713,696
728,124
15,213
484,064
47,805
1,048,470
14,676,999
1,813,024
901,845
2,812,709
2,023,898
3,064,443
172,839
947,566
74,142
1,561,351
40,000,146
3,664,580
13,175,822
283,655
2,251,958
327,879
591,514
2,547,563
-
53,587
2,673,887
1,643,853
407,955
2,186,266
2,591,473
301,044
2,845,243
5,308,433
13,583,777
5,071,071
4,843,431
628,923
6,110,644
20,295,408
73,086
4,023
2,624,672
2,727,474
565,000
174,249
10,715,083
638,086
178,272
36,362,637
3,637,509
40,360
(146,980)
(217,787)
3,961,916
990,354
14,825
1,005,179
-
14,486
14,486
(1,746,670)
273
(1,746,397)
1,045,539
(146,980)
(203,301)
2,215,519
2,910,777
7,372,143
8,417,682
277,255
130,275
933,282
729,981
12,788,392
15,003,911
21,371,072
24,281,849
The accompanying notes are an integral part of these financial statements.
15
(741,830)
15,098
(726,732)
STATE OF NEW MEXICO
CITY OF CLOVIS
Reconciliation of the Statement of Revenues, Expenditures and Changes
in Fund Balances of Governmental Funds to the Statement of Activities
For the Year Ended June 30, 2011
Amounts reported for governmental activities in the statement of activities
are different because:
Net change in fund balances - total governmental funds
$
2,910,777
Governmental funds report capital outlays as expenditures. However in the statement of activities,
the cost of those assets is allocated over their estimated useful lives and reported as depreciation
expense:
Capital expenditures recorded in capital outlay
Capital assets received as donations
Capital expenditures recorded in other expense lines
6,110,644
477,475
69,189
Depreciation expense on capital assets is reported in the government-wide statement of activities and
changes in net assets, but they do not require the use of current financial resources. Therefore
depreciation expense is not reported as expenditure in governmental funds.
(5,712,685)
In the Statement of Activities, a loss is recorded for assets that are removed from service that are not
fully depreciated. Thus, the change in net assets differs from the change in fund balance by the
amount of loss recorded for deleted capital assets.
(178,112)
Internal service funds are used by management to charge the cost of certain activities, such as
insurance to individual funds. The net change of the internal service funds resulting from transactions
not recorded with governmental funds.
267,853
The issuance of long-term debt (e.g. bonds, notes, capital leases) provides current financial resources
to governmental funds, while the repayment of the principal of long-term debt consumes the current
financial resources of governmental funds. Neither transaction, however, has any effect on net assets.
Also, governmental funds report the effect of premiums and similar items when debt is first issued,
whereas these amounts are deferred and amortized in the statement of activities:
Amortization of bond discounts
Amortization of bond issuance costs
Decrease in accrued interest
Increase in noncurrent and current accrued compensated absences
Issuance of long-term debt
Principal payments on bonds and notes payable
(1,343)
(2,756)
1,788
(43,813)
638,086
Other reclassifications are necessary to convert from the modified accrual basis of accounting to the
accrual basis of accounting to show the revenue earned from the current year's tax levy.
8,648
Due to rounding
-
Change in net assets of governmental activities
The accompanying notes are an integral part of these financial statements.
16
$
4,545,751
STATE OF NEW MEXICO
CITY OF CLOVIS
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance
Budget (Non-GAAP Budgetary Basis) and Actual
For the Year Ended June 30, 2011
Actual
(Non-GAAP
Budgetary Basis)
Budgeted Amounts
Original
Revenues:
Taxes
Property
Gross receipts
Gasoline and motor vehicle
Other
Intergovernmental income:
Federal operating grants
Federal capital grants
State operating grants
State capital grants
Charges for services
Licenses and fees
Fines, forfeitures and penalties
Investment income
Miscellaneous
Total revenues
$
Variances
Favorable
(Unfavorable)
Final
Final to Actual
1,555,188
12,265,240
38,000
950,900
1,555,188
12,465,240
38,000
950,900
1,629,641
13,694,197
26,399
1,009,897
74,453
1,228,957
(11,601)
58,997
562,290
9,850
1,869,850
354,000
178,000
34,000
129,000
17,946,318
768,550
18,636
1,894,786
354,000
178,000
34,000
458,720
18,716,020
548,767
9,849
2,363,702
463,502
157,626
23,447
954,059
20,881,086
(219,783)
(8,787)
468,916
109,502
(20,374)
(10,553)
495,339
2,165,066
3,983,925
14,080,683
375,000
2,248,939
443,991
486,942
4,146,995
14,492,105
375,000
2,449,675
451,408
756,520
3,649,851
13,251,846
283,655
2,263,756
329,855
591,514
497,144
1,240,259
91,345
185,919
121,553
165,006
21,619,480
22,671,703
20,370,477
2,301,226
Excess (deficiency) of revenues over expenditures
(3,673,162)
(3,955,683)
510,609
4,466,292
Other financing sources (uses)
Designated cash
Transfers in
Transfers out
Total other financing sources (uses)
2,517,273
2,796,880
(1,640,991)
3,673,162
2,957,182
2,905,255
(1,906,754)
3,955,683
Net change in fund balance
-
Fund balance - beginning of year
Expenditures:
Current:
General government
Public safety
Public Works
Culture and recreation
Health and welfare
Capital outlay
Debt Service:
Principal
Interest
Total expenditures
Fund balance - end of year
$
2,897,108
(1,906,754)
990,354
(2,957,182)
(8,147)
(2,965,329)
-
1,500,963
1,500,963
-
-
7,372,143
7,372,143
-
-
8,873,106
8,873,106
Net change in fund balance (GAAP)
$
Adjustments to revenue for tax accruals and other miscellaneous revenue accruals
(530,497)
Adjustments to expenditures for accrued wages, compensated absences, insurance and function expenditures
Net change in fund balance (non-GAAP budgetary basis)
The accompanying notes are an integral part of these financial statements.
17
1,045,539
75,073
$
1,500,963
STATE OF NEW MEXICO
CITY OF CLOVIS
Eastern New Mexico Rural Water Special Revenue Fund
Statement of Revenues, Expenditures and Changes in Fund Balance
Budget (Non-GAAP Budgetary Basis) and Actual
For the Year Ended June 30, 2011
Budgeted Amounts
Original
Revenues:
Taxes:
Property
Gross receipts
Gasoline and motor vehicle
Other
Intergovernmental:
Federal operating grants
Federal capital grants
State operating grants
State capital grants
Charges for services
Licenses and fees
Investment income
Miscellaneous
Total revenues
$
Variances
Favorable
(Unfavorable)
Actual
(Non-GAAP
Budgetary Basis)
Final
Final to Actual
-
-
-
3,620,662
3,620,662
388,529
3,620,662
4,009,191
388,528
1,179,642
1,568,170
(1)
(2,441,020)
(2,441,021)
3,445,891
-
3,834,420
-
2,624,791
-
1,209,629
-
73,090
3,476
3,522,457
94,694
4,024
3,933,138
94,694
4,023
2,723,508
1
1,209,630
Excess (deficiency) of revenues over
expenditures
98,205
76,053
(1,155,338)
(1,231,391)
Other financing sources (uses)
Designated cash
Transfers in
Transfers out
Proceeds from debt issuance
Total other financing sources (uses)
747,234
234,482
981,716
747,234
234,482
981,716
1,079,921
1,057,769
-
-
277,255
-
-
(643,601)
Expenditures:
Current:
General government
Public safety
Public works
Culture and recreation
Health and welfare
Capital outlay
Debt service:
Principal
Interest
Total expenditures
Net change in fund balance
Fund balance - beginning of year
Fund balance - end of year
$
Net change in fund balance (GAAP)
-
234,482
234,482
(747,234)
(747,234)
(920,856)
(1,978,625)
277,255
(1,701,370)
$
Adjustments to revenue for applicable accruals and deferrals
675,041
Adjustments to expenditures for applicable accruals and payments
Net change in fund balance (non-GAAP budgetary basis)
The accompanying notes are an integral part of these financial statements.
18
(146,980)
98,835
$
(920,856)
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Fund Net Assets
Proprietary Funds
As of June 30, 2011
2
Solid
Waste
Governmental
Activities
Business-Type Activities
Enterprise Funds
Major Funds
10
12
Wastewater
Airport
Total
48, 53, 54
Internal
Service Funds
Assets
Current assets
Cash and investments
$
Receivables:
Intergovernmental
Other receivables
Customer receivables, net of allowance
Notes receivable, current portion
Inventory
Prepaids
Total current assets
Noncurrent assets
Notes receivable, noncurrent portion
Capital assets
Less: accumulated depreciation
Total noncurrent assets
Total Assets
4,152,279
9,153,700
-
13,305,979
3,515,725
78,315
443,586
21,100
46,560
4,741,840
372,179
49,107
20,639
9,595,625
470,718
23,620
494,338
549,033
815,765
70,207
90,819
14,831,803
581
3,516,306
16,000,877
(7,218,235)
8,782,642
$ 13,524,482
1,304,919
44,722,403
(21,384,913)
24,642,409
34,238,034
21,562,204
(6,728,602)
14,833,602
15,327,940
1,304,919
82,285,484
(35,331,750)
48,258,653
63,090,456
85,244
(53,376)
31,868
3,548,174
78,020
127,928
7,149
467,521
680,618
1,026,123
31,263
19,817
22,691
1,304,919
646,701
3,051,514
329,163
7,923
21,790
232,805
591,681
1,355,286
117,206
169,535
29,840
1,304,919
232,805
1,114,222
4,323,813
9,694
2,658
12,352
2,447,480
489,371
13,751,930
-
2,447,480
14,241,301
-
2,936,851
3,617,469
11,744
13,763,674
16,815,188
591,681
11,744
16,700,525
21,024,338
12,352
8,782,642
1,124,371
9,907,013
8,938,859
8,483,987
17,422,846
14,833,602
(97,343)
14,736,259
32,555,103
9,511,015
42,066,118
31,868
3,503,954
3,535,822
$ 13,524,482
34,238,034
15,327,940
63,090,456
3,548,174
Liabilities and Net Assets
Liabilities:
Current liabilities
Accounts payable
$
Accrued payroll expenses
Accrued compensated absences
Accrued interest
Deferred revenue
Due to other funds
Current portion of bonds and notes payable
Current portion of capital leases
Total current liabilities
Noncurrent liabilities
Landfill closure
Bonds and notes payable
Bond premium, net of
amortization of $309
Total noncurrent liabilities
Total liabilities
Net Assets:
Invested in capital assets, net of related debt
Unrestricted net assets
Total net assets
Total Liabilities and Net Assets
The accompanying notes are an integral part of these financial statements.
19
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
For the Year Ended June 30, 2011
2
Solid
Waste
Operating revenues:
Charges for services
$
Governmental
Activities
Business-Type Activities
Enterprise Funds
Major Funds
10
12
Wastewater
Airport
Total
48, 53, 54
Internal
Service Funds
3,867,011
3,017,675
137,593
7,022,279
725,291
Total operating revenues
3,867,011
3,017,675
137,593
7,022,279
725,291
Operating expenses:
General and administrative
Personnel services
Contractual services
Supplies and purchased power
Maintenance and materials
Utilities
Depreciation
Miscellaneous
262,966
1,812,134
562,399
1,007,950
38,449
799,062
-
40,726
728,687
78,636
412,240
272,116
1,235,617
11,106
182,602
107,834
36,178
508,248
-
303,692
2,723,423
641,035
1,528,024
346,743
2,542,927
11,106
492,486
79,085
4,928
-
Total operating expenses
4,482,960
2,779,128
834,862
8,096,950
576,499
(697,269)
(1,074,671)
148,792
Operating income (loss)
Non-operating revenues (expenses):
Gain/loss on disposal of capital assets
State nonoperating grants
Interest income
Interest expense
Gross receipts and other taxes
Miscellaneous
Total non-operating revenues (expenses)
Federal capital grants
Transfers in
Transfers out
Net capital grants and transfers
(615,949)
238,547
(10,735)
4,250
93,557
(61,730)
464,843
67,759
(4,499)
93,417
(316,600)
357,087
2,522,021
2,138
30,745
(15,234)
2,526,271
189,112
(378,330)
464,843
455,591
7,301
67,352
557,944
129,405
2,554,904
3,242,253
74,653
497,581
(259,482)
728,661
447,948
(161,809)
165,372
-
728,661
1,110,901
(421,291)
51,308
(6,900)
238,099
1,014,800
165,372
1,418,271
44,408
180,094
1,382,752
2,023,007
3,585,853
267,853
Net assets, beginning of year
Restatement
9,726,919
-
16,040,094
-
12,713,252
-
38,480,265
-
3,267,969
-
Beginning net assets, as restated
9,726,919
16,040,094
12,713,252
38,480,265
3,267,969
9,907,013
17,422,846
14,736,259
42,066,118
3,535,822
Change in net assets
Net assets, end of year
$
The accompanying notes are an integral part of these financial statements.
20
STATE OF NEW MEXICO
CITY OF CLOVIS
Proprietary Funds
Statement of Cash Flows
For The Year Ended June 30, 2011
2
Solid
Waste
Cash flows from operating activities
Receipts from customers and users
$
Receipts from interfund services provided
Payments to suppliers and employees
Net cash provided (used) by
operating activities
3,886,669
(3,611,400)
275,269
Cash flows from noncapital
financing activities:
Transfers from other funds
Operating transfers to other funds
Payments received from note receivable
Tax receipts
Intergovernmental receipts
Miscellaneous income
497,581
(262,171)
464,843
4,250
67,759
Net cash provided (used) by
noncapital financing activities
Governmental
Activities
Business-Type Activities
Enterprise Funds
Major Funds
10
12
Wastewater
Airport
Total
48, 53, 54
Internal
Service Funds
3,102,203
(641,469)
(292,276)
(611)
6,696,596
(4,253,480)
725,291
(565,485)
2,460,734
(292,887)
2,443,116
159,806
447,948
(150,000)
122,691
728,661
234,084
398,177
2,522,021
30,743
1,343,706
(412,171)
122,691
464,843
3,254,932
332,586
51,306
(8,206)
67,353
110,453
772,262
1,383,384
2,950,941
5,106,587
Cash flows from capital and
related financing activities:
Acquisitions and construction
of capital assets
Proceeds from sale of capital assets
Principal paid on notes payable
Interest paid on notes payable
Long-term debt proceeds
(160,352)
3,563
(447,048)
(61,730)
-
(4,354,051)
13,708
(614,217)
(316,600)
7,012,054
(2,815,453)
-
(7,329,856)
17,271
(1,061,265)
(378,330)
7,012,054
-
Net cash provided (used) by capital
and related financing activities
(665,567)
1,740,894
(2,815,453)
(1,740,126)
-
Cash flows from investing activities:
Interest income
93,557
93,417
2,138
189,112
7,301
Net cash provided by investing activities
93,557
93,417
2,138
189,112
7,301
475,521
5,678,429
5,998,689
277,560
Net increase in cash and
temporary investments
$
(155,261)
The accompanying notes are an integral part of these financial statements.
21
STATE OF NEW MEXICO
CITY OF CLOVIS
Proprietary Funds
Statement of Cash Flows
For The Year Ended June 30, 2011
2
Solid
Waste
Net increase in cash and
cash equivalents-previous page
$
Cash and investments
June 30, 2010
Cash and investments
June 30, 2011
$
Reconciliation of operating income (loss)
to net cash provided (used)
by operating activities:
Operating income (loss)
Adjustments to reconcile operating
income to net cash provided (used)
by operating activities:
Depreciation expense
(Increase) decrease in:
Accounts receivable
Inventory
Prepaids
(Decrease) increase in:
Accounts payable
Accrued payroll
Deferred revenue
Compensated absences
Accrued interest
Estimated landfill postclosure costs
Net cash provided (used) by
operating activities
$
Non-cash transfer of capital assets
Wastewater
Airport
48, 53, 54
Internal
Service Funds
Total
475,521
5,678,429
(155,261)
5,998,689
277,560
3,676,758
3,475,271
155,261
7,307,290
3,238,165
4,152,279
9,153,700
-
13,305,979
3,515,725
238,547
(697,269)
(1,074,671)
508,248
2,542,927
(615,949)
799,062
$
Governmental
Activities
Business-Type Activities
Enterprise Funds
Major Funds
10
12
1,235,617
148,792
4,928
19,658
(3,381)
(5,221)
84,528
(18,611)
(1,977)
(429,869)
(2,713)
(325,683)
(21,992)
(9,911)
(4,791)
9,058
(3,767)
80,600
1,026,123
(1,866)
(122,691)
3,596
17,468
-
329,163
(1,022)
575
-
1,355,286
(7,679)
(122,691)
13,229
13,701
80,600
2,460,734
(292,887)
2,443,116
159,806
-
-
1,306
275,269
2,689
(11,809)
The accompanying notes are an integral part of these financial statements.
22
(29)
6,097
18
-
STATE OF NEW MEXICO
CITY OF CLOVIS
Statement of Fiduciary Assets and Liabilities
Agency Funds
As of June 30, 2011
Cash and investments
$
48,031
Total assets
$
48,031
Liabilities
Deposits held in trust
$
48,031
Total liabilities
$
48,031
The accompanying notes are an integral part of these financial statements.
23
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
NOTE 1 – Summary of Significant Accounting Policies
The City of Clovis (City) was incorporated during 1909 under the laws of the State of New Mexico. The
City operates under an elected Mayor-Council form of government and provides the following services as
authorized by its charter: public safety (police and fire), streets, sanitation, health and social services,
culture-recreation, public improvements, planning and zoning, water supply, airport operations, and
general government administrative services.
This summary of significant accounting policies of the City is presented to assist in the understanding of
the City’s financial statements. The financial statements and notes are the representation of the City’s
management who is responsible for their integrity and objectivity. The financial statements of the City
have been prepared in conformity with accounting principles generally accepted in the United States of
America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB)
is the accepted standard-setting body for establishing governmental accounting and financial reporting
principles. The financial statements have incorporated all applicable GASB pronouncements as well as
Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles
Board Opinions and Accounting Research Bulletins of the Committee on accounting procedures issued on
or before November 30, 1989 unless those pronouncements conflict with or contradict GASB
pronouncements. Governments also have the option of following subsequent private-sector guidance for
their government-wide financial statements, subject to the same limitation. The City has elected not to
follow subsequent private-sector guidance. The more significant of the government’s accounting policies
are described below.
A. Financial Reporting Entity
In evaluating how to define the City, for financial reporting purposes, management has
considered all potential component units. The decision to include any potential component units
in the financial reporting entity was made by applying the criteria set forth in GASB No. 14 and
No. 39. Blended component units, although legally separate entities, are in substance part of the
government’s operations. Each discretely presented component unit is reported in a separate
column in the government-wide financial statements to emphasize that it is legally separate from
the government.
The basic-but not the only-criterion for including a potential component unit within the reporting
entity is the governing body’s ability to exercise oversight responsibility. The most significant
manifestation of this ability is financial interdependency. Other manifestations of the ability to
exercise oversight responsibility include, but are not limited to, the selection of governing
authority, the designation of management, the ability to significantly influence operations, and
accountability for fiscal matters. A second criterion used in evaluating potential component units
is the scope of public service. Application of this criterion involves considering whether the
activity benefits the government and/or its citizens. A third criterion used to evaluate potential
component units for inclusion or exclusion from the reporting entity is the existence of special
financing relationships, regardless of whether the government is able to exercise oversight
responsibilities. Finally, the nature and significance of a potential component unit to the primary
government could warrant its inclusion within the reporting entity. Based upon the application of
these criteria, the following is a brief review of each potential component unit addressed in
defining the City’s reporting entity.
Discreetly Presented Component Unit
City of Clovis Housing and Redevelopment Agency, Inc. (The Agency) – This component unit has
a separately elected and/or appointed board and provides services to residents, generally within
the geographic boundaries of the government.
The component unit’s activities include enterprise funds as detailed on pages 10 thru 12 in the
City’s financial reports.
24
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Separately issued financial statements may be obtained directly from the Agency’s administrative
office by writing to Clovis Housing and Redevelopment Agency, Inc., 2101 W. Grand Ave., Clovis,
New Mexico 87901.
B. Government-wide and fund financial statements
The government-wide financial statements (i.e., the statement of net assets and the statement of
activities and changes in net assets) report information on all of the non-fiduciary activities of the
primary government. For the most part, the effect of interfund activity has been removed from
these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which rely to a
significant extent on fees and charges for support.
In the government-wide Statement of Net Assets, both the governmental and business-type
activities columns (a) are presented on a consolidated basis by column, (b) and are reported on a
full accrual, economic resource basis, which recognized all long-term assets and receivables as
well as long-term debt and obligations. The City’s net assets are reported in three parts –
invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, if applicable, even though the latter are excluded from the government-wide
financial statements. Major individual governmental funds and major individual enterprise funds
are reported as separate columns in the fund financial statements.
C. Measurement focus, basis of accounting, and financial statement presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary
fund financial statements, if applicable. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes
are recognized as revenues in the year for which they are billed.
Grants and similar items are recognized as revenue as soon as all eligibility requirements of time,
reimbursement and contingencies imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the government considers property tax revenues to be available
if they are collected within 60 days of the end of the current fiscal period. Grant revenues are
considered available if they are collected within 90 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences and
claims and judgments, are recorded only when payment is due.
25
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are
all considered to be susceptible to accrual and so have been recognized as revenues of the current
fiscal period. Sales and use taxes are classified as derived tax revenues and are recognized as
revenue when the underlying exchange takes place and the revenues are measurable and
available. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met. Only the portion of special assessments
receivable due within the current fiscal period is considered to be susceptible to accrual as
revenue of the current period. All other revenue items are considered to be measurable and
available only when cash is received by the government.
The City reports the following major governmental fund:
The General Fund is the government’s primary operating fund. It accounts for all
financial resources of the general government, except those required to be accounted for
in another fund.
Eastern NM Rural Water Fund (Authorized by Commission at Budget Approval) To
account for federal and state grants which are to be used for the study, design and
implementation of a water system project to deliver 24,000 acre-feet of water per annum
from the Ute Reservoir located on the Canadian River to 9 communities and 3 counties in
eastern New Mexico.
Street Construction To account for expenditures relating to state-shared projects, such
as the repairs and maintenance of City streets, which are part of the State arterial system.
Funding is from the Local Government road fund with matching funds transferred from
the City of Clovis General Fund.
The government reports the following major proprietary funds:
The Solid Waste Fund accounts for the provision of garbage and refuse removal services
to the residents of the City of Clovis. All activities necessary to provide such services are
accounted for in this fund.
The Wastewater Fund accounts for the wastewater system service provided for residents
of the City of Clovis, including administration, operation, maintenance, debt service,
billing and collection.
The Airport Fund accounts for the activities of the City’s airport. All activities necessary
to provide such services are accounted for in this fund.
Additionally, the government reports the following fund types:
Internal Service Funds account for workers compensation, unemployment insurance
services, and property and liability self-insurance provided to other departments of the
government. Services are provided on a cost reimbursement basis.
Fiduciary Funds account for monies collected and expended to veterinarians on behalf of
City residents who have had their unvaccinated animals detained and for the municipal
court service used to account for bonds collected from alleged law violators.
As a general rule the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other
charges between the government’s enterprise funds and various other functions of the
government. Elimination of these charges would distort the direct costs and program revenues
reported for the various functions concerned.
26
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Program revenues included in the Statement of Activities are derived directly from the program
itself or from parties outside the City’s taxpayer or citizenry, as a whole; program revenues reduce
the cost of the function to be financed from the City’s general revenues. Program revenues are
categorized as (a) charges for services, which include revenues collected for fees and use of City
services, facilities, etc., (b) program-specific operating grants, which includes revenues received
from state and federal sources are to be used as specified within each program grant agreement,
and (c) program-specific capital grants and contributions, which include revenues from state
sources to be used for capital projects. Internally dedicated resources are reported as general
revenues rather than as program revenues. Likewise, general revenues include all taxes
D. Assets, Liabilities and Net Assets or Fund Equity
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues of the airport, solid waste and wastewater funds are charges to
customers for sales and services. Operating expenses for enterprise funds include the cost of sales
and services, administrative expenses, and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as non-operating revenues and expenses.
E. Deposits and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and
short-term investments with original maturities of three months or less from the date of
acquisition.
State statutes authorize the City to invest in Certificates of Deposit, obligations of the U.S.
Government, and the State Treasurer’s Local Government Investment Pool.
Investments for the City are reported at fair value. The State Treasurer’s Pool operates in
accordance with appropriate state laws and regulations. The reported value of the pool is the
same as the fair value of the pool shares.
F. Receivables and Payables
Interfund activity is reported as loans, services provided, reimbursements, or transfers. Loans are
reported as interfund receivables and payables as appropriate and are subject to elimination upon
consolidation. Services provided, deemed to be at market or near market rates, are treated as
revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges
the appropriate benefiting fund and reduces its related cost as a reimbursement. All other
interfund transactions are treated as transfers. Transfers between governmental or between
proprietary funds are netted as part of the reconciliation to the government-wide financial
statements.
Advances between funds, as reported in the fund financial statements, are offset by a fund balance
reserve account in applicable governmental funds to indicate that they are not available for
appropriation and are not expendable available financial resources.
All receivables are reported at their gross value and, where appropriate, are reduced by the
estimated portion that is expected to be uncollectible. In the government-wide and governmental
fund financial statements, delinquent property taxes are recorded as revenue when levied, net of
estimated refunds and uncollectable amounts.
Property taxes are levied on November 1 based on the assessed value of property as listed on the
previous January 1 and are due in two payments by November 10th and April 10th. Property
27
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
taxes uncollected after May 10th are considered delinquent. The taxes attach as an enforceable
lien on property as of January 1st.
G. Inventories and Prepaid Items
Inventories in governmental funds consist of expendable supplies held for consumption, and are
valued at cost using a first-in, first-out (FIFO) method. Expendable supplies are accounted for
using the consumption method. Proprietary fund inventories are recorded at the lower of cost or
market on a first-in, first-out basis, and consist of operating supplies held for use in operations
and are recorded as expenditures when consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both the government-wide and fund financial statements.
H. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, sidewalks, and similar items), are reported in the applicable governmental or businesstype activities columns in the government-wide financial statements. Capital assets are defined
by the government as assets with an initial, individual cost of more than $5,000 and an estimated
useful life in excess of one year. Such assets are recorded at historical cost or estimated historical
cost if purchased or constructed. Pursuant to the implementation of GASB Statement No. 34, the
historical cost of infrastructure assets, (retroactive to 1979) are included as part of the
governmental capital assets reported in the government wide statements. Information
technology equipment including software is being capitalized and included in furniture, fixtures
and equipment in accordance with NMAC 2.20.1.9 C (5). Donated capital assets are recorded at
estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed. The total interest expense
capitalized by the City during the current fiscal year was $0. No interest was included as part of
the cost of capital assets under construction.
Property, plant, and equipment of the primary government are depreciated using the straight line
method over the following estimated useful lives:
Asset Type
Land
Construction in progress
Land improvements
Buildings and improvements
Infrastructure
Equipment and vehicles
Years
Perpetuity
Perpetuity
40
40
25
3-10
I. Accrued Expenses
Accrued expenses are comprised of the payroll expenditures based on amounts earned by the
employees through June 30, 2011, along with applicable PERA and Retiree Health Care.
28
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
J. Deferred Revenues
There are two types of deferred revenue. Under both the accrual and modified accrual basis of
accounting, revenue may be recognized only when it is earned. If assets are recognized in
connection with a transaction before the earnings process is complete, those assets must be offset
by a corresponding liability for deferred revenue (commonly referred to as unearned revenue).
The other type of deferred revenue is “unavailable revenue.” Under the modified accrual basis of
accounting, it is not enough that revenue has been earned if it is to be recognized as revenue of
the current period. It must also be susceptible to accrual (measurable and available to finance
expenditures of the current fiscal period). If assets are recognized in connection with a
transaction, but those assets are not yet available to finance expenditures of the current fiscal
period, then the assets must be offset by a corresponding liability for deferred revenue.
K. Compensated Absences
City employees are entitled to certain compensated absences based on their employment
classification and length of employment. With minor exceptions, the City allows 40-hour
workweek employees to accumulate unused sick leave to a maximum of 1,000 hours. 24-hour
shift employees can accumulate up to 1,344 hours. Earned vacation, up to the amount the
employee accrues each year, is allowed to be carried over from one calendar year to the next.
Upon termination, employees shall receive payment for unused accrued vacation. Employees
with service to City in excess of 20 years will be paid for 50% of accumulated sick leave.
Full-time, permanent employees are granted vacation benefits in varying amounts to specified
maximums depending on tenure with the City. Accumulated unused vacation is payable upon
retirement or termination from employment. All vacation pay and applicable accumulated sick
leave is accrued when incurred in the government-wide and proprietary fund financial
statements. A liability for these amounts is reported in the governmental funds only if they have
matured, for example, as a result of employee resignations and retirements.
L. Long-term Obligations
In the government-wide financial statements and proprietary fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable
governmental activities, business-type activities, or proprietary fund type statement of net assets.
For bonds issued after GASB 34 was implemented, bond premiums and discounts, as well as
issuance costs, are deferred and amortized over the life of the bonds using the effective interest
method. Bonds payable are reported net of the applicable bond premium or discount. For fund
financial reporting, bond premiums, discounts as well as issuance costs, are recognized in the
period the bonds are issued. Bond proceeds are reported as another financing source net of the
applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds
received, are reported as debt service expenditures.
M. Fund Equity
Equity is classified as net assets and displayed in three components in the government-wide
financial statements and the proprietary funds:
x
Invested in capital assets, net of related debt – Net assets invested in capital assets, net
of accumulated depreciation and reduced by the outstanding balances of any bonds,
mortgages, notes, or other borrowings that are attributable to the acquisition,
construction, or improvement of those assets.
x
Restricted Net Assets – Consist of net assets with constraints placed on the use either by
(1) external groups such as creditors, grantors, contributors, or laws or regulation of other
governments; or (2) law through constitutional provisions or enabling legislation.
29
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
x
Unrestricted Net Assets – All other net assets that do not meet the definition of
“restricted” or “invested in capital assets, net of related debt.”
When both restricted and unrestricted resources are available for use, it is the government’s
policy to use restricted resources first, then unrestricted resources as they are needed.
N. Governmental Fund Balances
Beginning with fiscal year 2011, the City implemented GASB Statement No. 54, Fund Balance
Reporting and Governmental Fund Type Definitions. This Statement provides more clearly
defined fund balance categories to make the nature and extent of the constraints placed on a
government’s fund balances more transparent. The Statement only applies to Governmental
funds and does not extend to Proprietary fund types. The following classifications describe the
relative strength of the spending constraints:
x
Nonspendable – Amounts not in a spendable form, such as prepaid expenses,
inventories, or long-term portion of receivables or property held for resale, if the use of
the proceeds from the collection/sale of property held for resale is not otherwise
constrained. Nonspendable amounts also includes amounts legally or contractually
required to remain intact, such as the principal of a permanent fund.
x
Restricted – Amounts constrained to specific purposes that are externally imposed or
imposed by law through constitutional provisions or enabling legislation (such as
taxpayers, grantors, bondholders, and higher levels of government).
x
Committed – Amounts constrained to specific purposes by the governmental entity’s
highest level of decision-making authority (the City Commission). To be reported as
committed, amounts cannot be used for any other purpose unless the City Commission
takes the same highest level action to remove or change the constraint.
x
Assigned – Amounts constrained by the City intends to be used for a specific purposes.
Intent can be expressed by the governing body (City Commission) or an official or body to
which the governing body delegates authority.
x
Unassigned –Balances available for any purpose. Positive amounts are reported only in
the general fund.
The City Commission establishes (and modifies or rescinds) fund balance commitments by
passage of an ordinance or resolution. This is typically done through adoption and amendment of
the budget. A fund balance commitment is further indicated in the budget document as a
designation or commitment of the fund (such as for special incentives). Assigned fund balance is
established by City through adoption or amendment of the budget as intended for specific
purpose (such as the purchase of fixed assets, construction, debt service, or for other purposes).
See the Schedule of Fund Balances on page 112 for additional information about fund balances.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balance is available, the City considers restricted funds to have been spent first. When an
expenditure is incurred for which committed, assigned, or unassigned fund balances are available,
the City considers amounts to have been spent first out of committed funds, then assigned funds,
and finally unassigned funds, as needed, unless City Commission or the finance department has
provided otherwise in its commitment or assignment actions.
30
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
P. Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
NOTE 2 – Stewardship, Compliance and Accountability
Budgetary Information
The City Charter establishes the City’s fiscal year as the twelve-month period beginning July 1 and ending
June 30. Prior to June 1 the Budget Director submits to management a proposed operating budget of
estimated revenues, expenditures, and transfers for the ensuing fiscal year for the General Fund, Special
Revenue Funds, Debt Service Funds, Capital Projects Fund and Enterprise Funds. Management
subsequently submits the budget (1) to the New Mexico Department of Finance and Administration for
review and approval; and (2) to the City Council for review and enactment of a resolution legally adopting
the budget. Once approved, the City Council may amend the legally adopted budget when unexpected
modifications are required in estimated revenues and appropriations. Additionally, the New Mexico
Department of Finance and Administration must approve any amendments to the budget.
Each fund’s appropriated budget is prepared on a Non-GAAP cash basis at the detailed line item level.
Revenues are budgeted by department and general ledger account. Expenditures are budgeted by
department and general ledger account. Expenditures may not exceed appropriations at the fund level.
All budget revisions at this level are subject to final review and approval by the City Council. Revisions to
the budget were made throughout the year.
Encumbrance accounting, under which purchase orders, contracts and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not
employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds,
Capital Projects Funds and Debt Service Funds.
The accompanying Statements of Revenue, Expenditures and Changes in Fund Balance – Budget (NonGAAP Budgetary Basis) and Actual present comparisons of the legally adopted budget with actual data on
a budgetary basis.
Since accounting principles applied for purposes of developing data on a budgetary basis differ
significantly from those used to present financial statements in conformity with accounting principles
generally accepted in the United States of America (GAAP) a reconciliation of resultant basis, perspective,
equity and timing differences in the excess (deficiency) of revenues and other sources of financial
resources for the year ended June 30, 2011 is presented. Reconciliations between the Non-GAAP
budgetary basis amounts and the financial statements on the GAAP basis by fund can be found on each
individual budgetary statement.
31
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
NOTE 3 – Deposits and Investments
The City’s cash, cash equivalents, investments, and collateral pledged are listed on pages 111-112 of this
report.
A summary of the City’s cash and investments as of June 30, 2011 is as follows:
Cash and investments
Cash and cash equivalents
Cash on hand
Cash
NMFA Debt Service Fund
Subtotal cash and cash equivalents
Investments
State Treasurer's Investment Pool
Certificates of deposit - maturities > 90 days
Federal Home Loan Notes - NMFA Reserve
Subtotal investments
Total cash and investments
Cash and investments by fund type
Governmental funds
Internal service funds
Subtotal governmental activities
Amount
$
$
$
Enterprise funds
7,180
14,138,379
2,492,783
16,638,342
11,924,965
5,843,902
462,654
18,231,521
34,869,863
Amount
18,000,129
3,515,724
21,515,853
13,305,979
Fiduciary funds
48,031
Total cash and investments
$
34,869,863
State statutes authorize the investment of City funds in a wide variety of instruments including certificates
of deposit and other similar obligations, state investment pool, money market accounts, and United States
Government obligations. All invested funds of the City properly followed State investment requirements
as of June 30, 2011.
Deposits of funds may be made in interest or non-interest bearing checking accounts in one or more
banks or savings and loan associations within the geographical boundaries of the City. Deposits may be
made to the extent that they are insured by an agency of the United States or by collateral deposited as
security or by bond given by the financial institution.
The rate of interest in non-demand interest-bearing accounts shall be set by the State Board of Finance,
but in no case shall the rate of interest be less than one hundred percent of the asked price on United
States treasury bills of the same maturity on the day of deposit.
Excess funds may be temporarily invested in securities which are issued by the State or by the United
States government, or by their departments or agencies, and which are either direct obligations of the
State or the United States or are backed by the full faith and credit of those governments.
According to the Federal Deposit Insurance Corporation, public unit deposits are funds owned by the
public unit. Time deposits, savings deposits and interest bearing NOW accounts of an institution in the
same state will be insured up to $250,000 in aggregate and separate from the $250,000 coverage for
public unit demand deposits at the same institution.
32
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure the City’s deposits may not be returned
to it. The City does not have a deposit policy for custodial credit risk. New Mexico State Statutes require
collateral pledged for deposits in excess of the federal deposit insurance to be delivered, or a joint
safekeeping receipt be issued, to the City for at least one half of the amount on deposit with the
institution. At June 30, 2011, $23,616,604 of the City’s bank balances of $24,790,354 was exposed to
custodial credit risk because it was collateralized with collateral held by the pledging bank’s trust
department, not in the City’s name. At June 30, 2011, $173,750 was exposed to custodial credit risk
because it was not collateralized or insured.
For the custodial credit risk of the workers compensation deposit of $72,958 in the NM Self Insurer’s fund
and the New Mexico Finance Authority deposit of $2,492,783 with the State Treasurer, see the separately
issued financial statements for the NM Municipal Self Insurer’s Fund and the NM Finance Authority
available through the New Mexico Office of the State Auditor at www.saonm.org.
Custodial Credit Risk – Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the
City will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party. The City does not have an investment policy for custodial credit risk. At
June 30, 2011, the City’s investment balances were exposed to custodial credit risk as follows. The local
short-term investment fund, along with other public monies in the State Treasurer's investment account
including amounts held by the NM Self Insurer’s fund, is invested in repurchase agreements secured at
102% by U.S. Government Securities. The State Treasurer has the responsibility to pledge collateral at
102% of investment balances for the City. All investing is performed in accordance with State Statutes
and the City Charter. For more information, refer to separately issued financial statements for the State
Treasurer, which disclose the collateral pledged to secure the State Treasurer's cash and investments.
The US Treasury Mutual Funds are all backed by the full faith and credit of the U.S. government and are
therefore insured against loss.
The types of collateral allowed are limited to direct obligations of the United States Government and all
bonds issued by any agency, City or political subdivision of the State of New Mexico.
Interest Rate Risk
The City does not have a formal policy limiting investment maturities to manage its exposure to fair value
losses from increasing interest rates. In addition, the City places no limit on the amount it may invest in
any one issuer. More than 5 percent of the City’s investments are in the State LGIP, certificates of deposit,
and Federal Reserve notes. These investments are 65%, 32%, and 3%, respectively, of the City’s total
investments. The City’s investments at June 30, 2011 include the following:
Investments
New MexiGROW LGIP
Certificates of deposit
U.S. Government Obligations:
Federal Home Loan Notes - NMFA Reserve
Total
Fair
Value
11,924,965
5,843,902
Maturity
WAM - 36 days
12 months
<90 days
$
462,654
18,231,521
The LGIP’s portfolio’s weighted average maturity (WAM) is a key determinant of the tolerance of a fund’s
investment to rising interest rates. In general, the longer the WAM, the more susceptible the fund is to
rising interest rates. The LGIP portfolio’s weighted average maturity (WAM) was 36 days as of June 30,
2011.
33
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
The New MexiGROW Local Government Investment Pool’s (LGIP) investments are valued at fair value
based on quoted market prices as of the valuation date. The LGIP is not SEC registered. The New Mexico
State Treasurer is authorized to invest the short-term investment funds, with the advice and consent of
the State Board of Finance, in accordance with Sections 6-10-10 I through 6-10-10 P and Sections 6-1010.1 A and E, NMSA 1978. The pool does not have unit shares. Per Section 6-10-10.1F, NMSA 1978, at the
end of each month all interest earned is distributed by the State Treasurer to the contributing entities in
amounts directly proportionate to the respective amounts deposited in the fund and the length of time the
fund amounts were invested. Participation in the LGIP is voluntary. Collateral pledged to secure State
Treasurer cash and investments is reported in the State Treasurer’s separately issued financial statements.
Credit Risk
As of June 30, 2011, the City’s investments were rated as follows:
Investment Type
New MexiGROW LGIP
Certificates of deposit
U.S. Government Obligations:
Federal Home Loan Notes - NMFA Reserve
Rating
AAAm
No rating
AAA
NOTE 4 – Receivables
Receivables as of June 30, 2011, including the applicable allowances for uncollectible accounts, are as
follows:
Governmental Funds
Accounts
Taxes (Property, GRT, etc)
Grants:
State
Federal
Other
Subtotal
Less: Allowance for uncollectibles
Net receivables
$
$
Proprietary Funds
Accounts
Taxes (Property, GRT, etc)
Grants:
State
Federal
Subtotal
Less: Allowance for uncollectibles
Net receivables
$
$
(01)
General
Fund
2,454,414
2,679,982
20,000
5,154,396
(2,311,985)
2,842,411
(02)
Solid
Waste
593,602
78,315
671,917
(150,016)
521,901
(36, 38, 93)
(94, 97, 99)
Eastern NM
Rural Water
1,260,236
1,260,236
1,260,236
(10)
Wastewater
504,653
504,653
(132,474)
372,179
(87)
Street
Repair
Nonmajor
Funds
-
1,598,301
395,373
395,373
395,373
388,086
35,074
2,021,461
2,021,461
(12)
Airport
151
90,816
379,902
470,869
(151)
470,718
Total
Proprietary
1,098,406
78,315
90,816
379,902
1,647,439
(282,641)
1,364,798
Total
Governmental
2,454,414
4,278,283
1,655,609
388,086
55,074
8,831,466
(2,311,985)
6,519,481
Internal
Service
Funds
-
In accordance with GASB No. 33, the property tax revenues totaling $77,973 that were not collected within the
period of availability have been reclassified as deferred revenue in the governmental fund financial statements.
34
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
NOTE 5 – Interfund Balances and Transfers
The City recorded interfund receivable/payable to reflect a temporary loan between funds. The purpose
of the loans were to cover cash shortages until grant reimbursements could be obtained. All interfund
receivables/payables are expected to repaid within one year. Interfund balances as of June 30, 2011, are
as follows:
Due from other
funds
General Fund
General Fund
General Fund
General Fund
General Fund
General Fund
General Fund
Fund #
01
01
01
01
01
01
01
Due to other funds
ENMR Water Grant - Major Fund - Special Revenue Fund
Dept of Justice Fund - Non-major Spec Rev Fund
Golf Course Fund - Non-major Spec Rev Fund
ARRA Stimulus Fund - Non-major Spec Rev Fund
Drug Control Fund - Non-major Spec Rev Fund
Clovis Recycling Fund - Non-major Spec Rev Fund
Airport Fund - Major Fund - Proprietary Fund
Fund #
38
$
96
19
83
98
76
12
$
Amount
1,238,628
3,500
200,000
263,195
80,931
9,231
232,805
2,028,290
The City recorded interfund transfers to reflect transfers of cash in accordance with the budget. Transfers
and payments within the City are substantially for the purpose of subsidizing operating functions and
funding capital projects, primarily street projects. All transfers made during the year were considered
routine and were consistent with the general characteristics of the City’s transfer policy. The composition
of interfund transfers during the year ended June 30, 2011 is as follows:
Transfers Out
General
01
87
02
General
Street
Const.
Solid
Waste
$
Transfers In
10, 11, 44
12
67, 68
Wastewater
Airport
161,151
Non-Major
48, 53, 54
Governmental
1,695,603
Internal
Service
51,308
Total
1,908,062
-
-
-
Solid Waste
259,482
-
-
-
-
-
-
259,482
Wastewater
158,638
-
3,171
-
-
-
-
161,809
2,486,208
14,486
494,410
447,948
4,221
-
-
3,447,273
1,900
-
-
-
-
5,000
-
6,900
2,906,228
14,486
497,581
447,948
165,372
1,700,603
51,308
5,783,526
Non-Major
Governmental
Internal Service
Total
$
Of the transfers in to the general fund shown above, a total of $7,812 was related to the transfer of capital assets
into the general fund from other fund types. These amounts are not shown on the governmental fund financial
statements, but are reflected on the government-wide financial statements.
NOTE 6 – Capital Assets
A summary of capital assets and changes occurring during the year ended June 30, 2011, including those
changes pursuant to the implementation of GASB Statement No. 34, follows. Land and construction in
progress are not subject to depreciation.
35
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Governmental Activities includes
Internal Service Funds
Capital assets not being depreciated:
Land
Construction in progress
Total capital assets not being depreciated
Balance
June 30, 2010
$
Additions and
Transfers In
Deletions and
Transfers Out
3,019,938
4,175,693
7,195,631
10,551
1,259,373
1,269,924
Capital assets being depreciated:
Land improvements
Buildings and improvements
Equipment and vehicles
Infrastructure
Total capital assets being depreciated
Total capital assets
9,812,324
25,577,429
19,074,283
61,718,189
116,182,225
123,377,856
412,110
1,229,557
3,752,983
5,394,650
6,664,574
(821,290)
(821,290)
(821,290)
Less accumulated depreciation:
Land improvements
Buildings and improvements
Equipment and vehicles
Infrastructure
Total accumulated depreciation
Total capital assets net of depreciation
(3,423,842)
(7,142,547)
(11,393,829)
(28,627,838)
(50,588,056)
72,789,800
(516,069)
(1,872,059)
(1,105,872)
(2,223,613)
(5,717,613)
946,961
628,080
628,080
(193,210)
$
Business-Type Activities
Capital assets not being depreciated:
Land
Construction in progress
Total capital assets not being depreciated
Balance
June 30, 2010
$
Additions and
Transfers In
4,137,890
1,800,868
5,938,758
729,000
6,122,497
6,851,497
Capital assets being depreciated:
Land improvements
Buildings and improvements
Equipment and vehicles
Infrastructure
Total capital assets being depreciated
Total capital assets
8,457,129
10,632,691
9,848,523
40,325,009
69,263,352
75,202,110
15,132
215,220
248,008
478,360
7,329,857
Less accumulated depreciation:
Land improvements
Buildings and improvements
Equipment and vehicles
Infrastructure
Total accumulated depreciation
Total capital assets net of depreciation
(2,413,663)
(3,764,618)
(6,383,404)
(20,431,997)
(32,993,682)
42,208,428
(254,152)
(358,799)
(733,819)
(1,196,157)
(2,542,927)
4,786,930
$
36
-
Deletions and
Transfers Out
-
Reclass and
Adjustments
(3,662,092)
(3,662,092)
2,175,688
928,685
45,599
557,719
3,707,691
45,599
(36,479)
(36,479)
9,120
Reclass and
Adjustments
Balance
June 30, 2011
3,030,489
1,772,974
4,803,463
11,988,012
26,918,224
19,528,149
66,028,891
124,463,276
129,266,739
(3,939,911)
(9,014,606)
(11,908,100)
(30,851,451)
(55,714,068)
73,552,671
Balance
June 30, 2011
(1,801,888)
(1,801,888)
4,866,890
6,121,477
10,988,367
(200,884)
(200,884)
(200,884)
(45,599)
1,801,888
1,756,289
(45,599)
8,457,129
10,647,823
9,817,260
42,374,905
71,297,117
82,285,484
168,380
168,380
(32,504)
36,479
36,479
(9,120)
(2,667,815)
(4,123,417)
(6,912,364)
(21,628,154)
(35,331,750)
46,953,734
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Depreciation expense for the year ended June 30, 2011 was charged to the following functions and funds:
Governmental activities:
General government
Public safety
Public works
Culture and recreation
Health and welfare
Total
$
272,246
729,284
3,848,065
696,907
166,183
5,712,685
Internal Service Fund
Total governmental activities
4,928
5,717,613
Business type activities:
Solid Waste
Wastewater
Airport
Total business-type activities
799,062
1,235,617
508,248
2,542,927
$
NOTE 7 – Long-term Debt
Long-term liability activity for the year ended June 30, 2011, was as follows:
Balance
30-Jun-10
Governmental Activities:
Gross receipts tax
revenue bonds
Series 1999
Series 2005
Total bonds payable
Additions
Retirements
Balance
30-Jun-11
Due Within
One Year
1,295,000
2,910,000
4,205,000
-
(415,000)
(150,000)
(565,000)
880,000
2,760,000
3,640,000
430,000
155,000
585,000
NMFA Notes payable
2009 ENMRWUA No 84-WTB
2009 ENMRWUA No 56-WTB
2010 ENMRWUA - WTB
Total notes payable
415,160
114,236
860,976
1,390,372
-
(22,577)
(6,212)
(44,301)
(73,090)
392,583
108,024
816,675
1,317,282
22,637
6,228
44,412
73,277
Compensated Absences
1,051,647
701,141
(657,328)
1,095,460
712,049
6,647,019
701,141
(1,295,418)
6,052,742
1,370,326
Governmental-activities
long-term liabilities
$
$
37
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Balance
30-Jun-10
Business-type Activities:
Notes Payable
NM Environmental Dept.
NM Finance Authority
Total notes payable
Additions
Retirements
Balance
30-Jun-11
Due Within
One Year
8,012,848
1,403,940
9,416,788
-
(374,217)
(447,048)
(821,265)
7,638,631
956,892
8,595,523
381,701
467,521
849,222
Gross receipts tax
revenue bonds
Series 2010
Total bonds payable
-
7,000,000
7,000,000
(240,000)
(240,000)
6,760,000
6,760,000
265,000
265,000
Compensated Absences
156,307
114,264
(101,036)
169,535
169,535
9,573,095
7,114,264
(1,162,301)
15,525,058
1,283,757
Business-type-activities
long-term liabilities
$
$
In prior years, the general fund has typically been used to liquidate long-term compensated absence
liabilities.
Bonds payable for governmental funds at June 30, 2011 are comprised of the following:
Sales Tax Revenue
Bonds Series
February 1, 1999
Original issue:
Principal:
Interest:
$
Rates:
1-Feb-99
5,000,000
June 1 &
December 1
3.85% to 4.30%
Sales Tax Revenue
Bonds Series
June 1, 2005
$
1-Jun-05
3,580,000
June 1 &
December 1
2.50% to 4.50%
The February 1, 1999 Gross Receipts Tax Revenue Bonds, Series 1999, were issued to defray, in part (i) the
cost of constructing, purchasing, furnishing, equipment (including, specifically, the purchase of computer
hardware and software for use in taking care of “Year 2000” issues that the City may have), rehabilitating,
making addition to or making improvement to one or more public buildings or purchasing or improving
any ground relate thereto. The Bonds are being issued pursuant to Sections 3-31-1 through 3-31-12 NMSA
1978, as amended. The 1999 Bonds and all payments of principal, premium, and interest thereon whether
at maturity or on a redemption date shall be paid with pledged revenues payable from the revenues
distributed to the City by the New Mexico Taxation and Revenue Department pursuant to Sections 7-9-4,
NMSA 1978, as amended, 7-1-6.1 and 7-1-6.4 NMSA, as amended and 7-1-6.15 NMSA, 1978 as amended.
The bonds mature on June 1, 2013.
The annual requirements to amortize the 1999 Bond Issue outstanding as of June 30, 2011, including
interest payments are as follows:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
Principal
$
$
430,000
450,000
880,000
38
Interest
37,400
19,125
56,525
Total Debt
Service
467,400
469,125
936,525
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
The June 1, 2004 Gross Receipts Tax Revenue Bonds, Series 2004, were issued to defray, in part (i) the
cost of constructing, purchasing, furnishing, equipping or making improvement to the public buildings of
the City, including a City Convention Center and (ii) paying all costs incidental to the issuance of the
bonds. The Bonds are being issued pursuant to Sections 3-31-1 through 3-31-12 NMSA 1978, as amended.
The 2004 Bonds and all payments of principal, premium, and interest thereon whether at maturity or on
a redemption date shall be paid with pledged revenues payable from the revenues distributed to the City
by the New Mexico Taxation and Revenue Department pursuant to Sections 7-9-4, NMSA 1978, as
amended, 7-1-6.1 and 7-1-6.4 NMSA, as amended and 7-1-6.15 NMSA, 1978 as amended. The bonds
mature on June 1, 2025.
The annual requirements to amortize the 2004 Bond Issue outstanding as of June 30, 2011, including
interest payments are as follows:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
2017-2021
2022-2026
Principal
$
$
155,000
160,000
165,000
170,000
175,000
995,000
940,000
2,760,000
Interest
113,419
107,219
100,819
94,219
86,569
321,244
101,320
924,809
Total Debt
Service
268,419
267,219
265,819
264,219
261,569
1,316,244
1,041,320
3,684,809
The annual requirements to amortize the combined revenue bond issues outstanding at June 30, 2011,
including interest payments are as follows:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
2017-2021
2022-2026
Principal
$
$
585,000
610,000
165,000
170,000
175,000
995,000
940,000
3,640,000
Interest
150,819
126,344
100,819
94,219
86,569
321,244
101,320
981,334
Total Debt
Service
735,819
736,344
265,819
264,219
261,569
1,316,244
1,041,320
4,621,334
The City of Clovis as fiscal agent for the Eastern New Mexico Rural Water Authority (ENMRWA) entered
into two separate loan/grant agreements with the NM Finance Authority in September 2008 for the
planning, design and engineering of a regional water supply project to provide potable water from Ute
Reservoir on the Canadian River to the participating entities of the ENMRWA for municipal and
industrial purposes. The terms of the first agreement call for a grant from the NMFA for $1,125,000 along
with a loan totaling $125,000. The terms of the second agreement call for a grant from the NMFA for
$1,817,120 along with a loan totaling $454,280. The interest/administrative fee on both notes is 0.25%.
Both notes mature on June 1, 2028. The note principal, interest, and administrative fees will be paid for
with pledged revenues from the net utility revenues or the City’s wastewater utility system.
In March 2010, the City entered into a loan/grant agreement with the NM Finance Authority for activity
associated with the ENMRWA project. The terms of the agreement call for a grant from the NMFA Water
Trust Board for $3,620,662 along with a loan totaling $905,166. The interest/administrative fee on the
note is 0.25% and the maturity date on the note is June 1, 2029. The note principal, interest, and
39
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
administrative fees will be paid for with pledged revenues from the net utility revenues or the City’s
wastewater utility system.
In December 2010, the City entered into a loan/grant agreement with the NM Finance Authority for
activity associated with the ENMRWA project. The terms of the agreement call for a grant from the
NMFA Water Trust Board for $3,982,500 along with a loan totaling $442,500. The
interest/administrative fee on the note is 0.25% and the maturity date on the note is June 1, 2030. The
note principal, interest, and administrative fees will be paid for with pledged revenues from the net utility
revenues or the City’s wastewater utility system. As of June 30, 2011, no amounts had been received
related to this agreement.
The annual requirements to amortize the combined NMFA notes outstanding at June 30, 2011, including
interest payments are as follows:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
Interest &
Admin Fees
Principal
$
$
73,277
73,456
73,641
73,826
74,011
372,845
377,542
198,687
1,317,285
3,309
3,127
2,942
2,758
2,573
10,083
5,400
968
31,160
Total Debt
Service
76,586
76,583
76,583
76,584
76,584
382,928
382,942
199,655
1,348,445
Bonds payable for proprietary funds at June 30, 2011 are comprised of the following:
Sales Tax Revenue
Bonds Series
September 21, 2010
Original issue:
Principal:
Interest:
$
Rates:
21-Sep-10
7,000,000
June 1 &
December 1
2.00% to 4.00%
The September 21, 2010 Gross Receipts Tax Revenue Bonds, Series 2010, were issued to defray, in part (i)
the cost of constructing, purchasing, furnishing, equipping or making improvement to the City’s waste
water treatment plant and (ii) paying all costs incidental to the issuance of the bonds. The Bonds are
being issued pursuant to Sections 3-31-1 through 3-31-12 NMSA 1978, as amended. The 2010 Bonds and
all payments of principal, premium, and interest thereon whether at maturity or on a redemption date
shall be paid with pledged revenues payable from the revenues distributed to the City by the New Mexico
Taxation and Revenue Department pursuant to Sections 7-9-4, NMSA 1978, as amended, 7-1-6.1 and 7-16.4 NMSA, as amended and 7-1-6.15 NMSA, 1978 as amended. The bonds mature on June 1, 2025.
40
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
The annual requirements to amortize the proprietary fund bonds outstanding as of June 30, 2011,
including interest payments are as follows:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
$
$
Principal
Interest
265,000
270,000
275,000
280,000
290,000
1,595,000
1,925,000
1,860,000
6,760,000
212,538
207,238
201,838
196,338
190,738
828,688
553,125
184,313
2,574,816
Total Debt
Service
477,538
477,238
476,838
476,338
480,738
2,423,688
2,478,125
2,044,313
9,334,816
The notes payable of the City’s proprietary funds as of June 30, 2011 are comprised of the following:
Solid waste loan with the NM Finance Authority dated May 1, 1999,
with annual principal installments ranging from $153,737 to
$489,371 due May 1 annually. Interest rates range from 3.15% to
4.68%, due semi-annually on May 1, and November 1. The loan
$
matures on May 1, 2013.
Wastewater loan with the NM Environment Department dated, May
19, 2006 with annual principal installments of $318,652 due annually
on the date of completion of the project. Interest rate at 2.0%. The
loan matures on June 30, 2015.
Less current portion
Total outstanding long-term debt - proprietary funds
$
956,892
7,638,631
8,595,523
(849,222)
7,746,301
The annual requirements to amortize the proprietary fund loans outstanding as of June 30, 2011,
including interest payments are as follows:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
Principal
$
$
849,222
878,706
397,122
405,064
413,166
2,193,133
2,421,396
1,037,714
8,595,523
Interest
164,570
136,801
107,437
101,224
94,887
443,204
196,311
24,431
1,268,865
Total Debt
Service
1,013,792
1,015,507
504,559
506,288
508,053
2,636,337
2,617,707
1,062,145
9,864,388
NOTE 8 – Risk Management
The City is exposed to various risks of loss related to torts; thefts of, damage to, and destruction of assets;
errors and omissions; and natural disasters for which the government carries commercial insurance. The
City established limited risk management programs for workers’ compensation (as discussed below) and
unemployment claims. Premiums for unemployment claims are paid to the appropriate internal service
fund by all other funds and are available to pay claims, claims reserves, and administrative costs of the
program.
41
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
Effective January 1, 1991, the City established a limited risk management program for workers
compensation. The City contracted with the New Mexico Self Insurer Fund (Fund) as administrator for
this program. At the beginning of each policy period, the City pays a retention premium which covers
expenses of the Fund, including, but not limited to, reinsurance expenses, claims adjusting, rating and
underwriting, safety and loss control, reporting and administration. In the retention rating year (1/1/91 –
1/1/92), the City paid a “loss fund deposit” to the Fund equal to 15% of the estimated “manual premium”.
This deposit is retained by the Fund for the benefit of the City in paying all applicable claims and costs for
all policy periods. Each anniversary date, the deposit will be reviewed and revised if necessary. The City’s
self-insured specific retention is $250,000 per accident, with aggregate of 150% of the “manual premium”
for a policy period.
The City accounts for this program in its Internal Service Fund, Workers Compensation. The Workers
Compensation Fund allocates the cost of providing claim servicing and claim payments by charging a
“premium” to each participating governmental and business-type activities fund, based on each fund’s
percentage of the estimated “manual premium”. This charge considers recent trends in actual claims
experience and makes provision for catastrophic loss.
The Workers Compensation fund liabilities are reported when it is probable that a loss has occurred and
the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have
been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an
exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and
damage awards, Accordingly, claims are re-evaluated periodically to consider the effects of inflation,
recent claim settlement trends (including frequency and amount of payout), and other economic and
social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment
expenses related to specific claims and other claims adjustment expenses regardless of whether allocated
to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component
of the claims liability estimate. Settlements have not exceeded coverage for the current fiscal year.
The City continues to carry commercial insurance for all other risks. The City is in the process of
establishing a fund for property and liability self-insurance. As of June 30, 2011, no claims activity had
taken place in the fund. The only activity for the year ended June 30, 2011 consisted of an operating
transfer from the general fund.
NOTE 9 – PERA Pension Plan
Plan Description: Substantially all of the City’s full-time employees participate in a public employee
retirement system authorized under the Public Employees Retirement Act (Chapter 10, Article 11 NMSA
1978.) The Public Employee Retirement Association (PERA) is the administrator of the plan, which is a
cost-sharing, multiple-employer defined benefit retirement plan. The plan provides for retirement,
disability benefits, survivor benefits, and cost-of-living adjustments to plan members and beneficiaries.
PERA issues a separate, publicly available financial report that includes financial statements and required
supplementary information for the plan. That report may be obtained by writing to PERA, P. O. Box 2123,
Santa Fe, New Mexico 87504-2123.
The report is also available on PERA’s website at
www.pera.state.nm.us.
Funding Policy: Plan members are required to contribute the following percentages of their gross salary:
16.3% for law enforcement and fire protection employees; and 15.65% for municipal employees. The City
was required to contribute the following percentages of the gross covered salary: 18.5% for law
enforcement and fire protection plan members; and 11.65% for municipal plan members. The
contribution requirements of plan members and the City of Clovis are established in State Statute under
Chapter 10, Article 11 NMSA 1978. The requirements may be amended by acts of the legislature. The City
of Clovis’ contributions to PERA for the years ending June 30, 2011, 2010 and 2009 were approximately
$564,727, $547,065, and $476,156, respectively, which equal the amount of the required contributions for
all years.
42
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
NOTE 10 – Pension Plan
The City contributes to a defined contribution pension plan adopted under the provision of Internal
Revenue Code Section 401.
A defined contribution pension plan provides pension benefits in return for services rendered, provides
an individual account for each participant, and specifies how contributions to the individual’s account are
to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined
contribution pension plan, the benefits a participant will receive depend solely on the amount contributed
to the participant’s account and the returns earned on investment on those contributions. As established
by local ordinance, all employees of the City participating in the Deferred Compensation Plan are eligible
to participate. The City is required to contribute 14% of the employee’s gross earnings. Contributions by
the City belong to the participant upon retirement or termination, provided the vesting requirements have
been satisfied.
The vesting provisions for all new employees hired on or after July 8, 1990, are as follows:
30% after 3 years of completed service
40% after 4 years of completed service
100% after 5 years of completed service
All employees hired prior to July 8, 1990, were 100% vested on the date of hire.
For the years ended June 30, 2011, 2010, and 2009, the City’s required and actual contributions totaled
$1,377,992, $1,393,291, and $1,365,178, respectively.
NOTE 11 – Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue
Code Section 457. The Plan is administered by International City/County Management Association.
The plan, available to all full-time City employees, permits them to defer a portion of their salary until
future years. The deferred compensation is not available to employees until termination, retirement,
death, or unforeseeable emergency.
Employees are mandated to contribute a minimum of 3% of their gross salary but may elect to contribute
up to 100% of their salary up to a maximum dollar amount of $16,500 per year into the plan. Eligible
employees may also make catch-up contributions totaling $5,500 per year. There are employees that are
making contributions to the Deferred Compensation Plan. All contributions withheld from participant’s
wages by the City have been paid to the plan administrator. Employee contributions withheld and
remitted to the plan were $894,976, $825,910 and $827,543 for the years ended June 30, 2011, 2010 and
2009, respectively.
NOTE 12 – Post Employment Benefits – State Retiree Healthcare Plan
Plan Description: The City of Clovis contributes to the New Mexico Retiree Health Care Fund, a costsharing multiple-employer defined benefit postemployment healthcare plan administered by the New
Mexico Retiree Health Care Authority (RHCA). The RHCA provides health care insurance and
prescription drug benefits to retired employees of participating New Mexico government agencies, their
spouses, dependents, and surviving spouses and dependents. The RHCA Board was established by the
Retiree Health Care Act (Chapter 10, Article 7C, NMSA 1978). The Board is responsible for establishing
and amending benefit provisions of the healthcare plan and is also authorized to designate optional
and/or voluntary benefits like dental, vision, supplemental life insurance, and long-term care policies.
Eligible retirees are: 1) retirees who make contributions to the fund for at least five years prior to
retirement and whose eligible employer during that period of time made contributions as a participant in
43
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
the RHCA plan on the person’s behalf unless that person retires before the employer’s RHCA effective
date, in which the event the time period required for employee and employer contributions shall become
the period of time between the employer’s effective date and the date of retirement; 2) retirees defined by
the Act who retired prior to July 1, 1990; 3) former legislators who served at least two years; and 4) former
governing authority members who served at least four years.
The RHCA issues a publicly available stand-alone financial report that includes financial statements and
required supplementary information for the postemployment healthcare plan. That report and further
information can be obtained by writing to the Retiree Health Care Authority at 4308 Carlisle NE, Suite
104, Albuquerque, NM 87107.
Funding Policy: The Retiree Health Care Act (Section 10-7C-13 NMSA 1978) authorizes the RHCA Board
to establish the monthly premium contributions that retirees are required to pay for healthcare benefits.
Each participating retiree pays a monthly premium according to a service based subsidy rate schedule for
the medical plus basic life plan plus an additional participation fee of five dollars if the eligible participant
retired prior to the employer’s RHCA effective date or is a former legislator or former governing authority
member. Former legislators and governing authority members are required to pay 100% of the insurance
premium to cover their claims and the administrative expenses of the plan. The monthly premium rate
schedule can be obtained from the RHCA or viewed on their website at www.nmrhca.state.nm.us.
The Retiree Health Care Act (Section 10-7C-15 NMSA 1978) is the statutory authority that establishes the
required contributions of participating employers and their employees. During the fiscal year ended,
June 30, 2011, the statute required each participating employer to contribute 1.666% of each participating
employee’s annual salary; each participating employee was required to contribute .8333% of their salary.
In the fiscal years ending June 30, 2012 and June 30, 2013 the contribution rates for employees and
employers will rise as follows:
For employees who are not members of an enhanced retirement plan the contribution rates will be:
Fiscal Year
FY12
FY13
Employer
Contribution
Rate
1.834%
2.000%
Employee
Contribution
Rate
0.917%
1.000%
For employees who are members of an enhanced retirement plan (state police and adult correctional
officer coverage plan 1; municipal police member coverage plans 3, 4 and 5; municipal fire member
coverage plan 3, 4 and 5; municipal detention officer member coverage plan 1; and members pursuant to
the Judicial Retirement Act [10-12B-1 NMSA 1978]), during the fiscal year ended June 30, 2011, the
statute required each participating employer to contribute 2.084% of each participating employee’s
annual salary, and each participating employee was required to contribute 1.042% of their salary. In the
fiscal years ending June 30, 2012 and June 30, 2013 the contributions rates for both employees and
employers will rise as follows:
Fiscal Year
FY12
FY13
Employer
Contribution
Rate
2.292%
2.500%
Employee
Contribution
Rate
1.146%
1.250%
Also, employers joining the program after 1/1/98 are also required to make a surplus-amount
contribution to the RHCA based on one of two formulas at agreed-upon intervals.
The RHCA plan is financed on a pay-as-you-go basis. The employer, employee and retiree contributions
are required to be remitted to the RHCA on a monthly basis. The statutory requirements for the
contributions can be changed by the New Mexico State Legislature.
44
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
For the fiscal years ended June 30, 2011, 2010, and 2009, City of Clovis remitted $210,539, $154,677, and
$144,619 in employer contributions, respectively, to the Retiree Health Care Authority.
NOTE 13 – Contingencies
The City of Clovis participates in a number of federal, state, and county programs that are fully or partially
funded by grants received from other governmental units. Expenditures financed by grants are subject to
audit by the appropriate grantor government. If expenditures are disallowed due to noncompliance with
grant program regulations, the City of Clovis may be required to reimburse the grantor government. As of
June 30, 2011, significant amounts of grant expenditures have not been audited by the grantor agencies.
Management believes that any disallowed expenditures discovered in subsequent audits, if any, will not
have a material effect on any of the individual funds or the overall financial position of the City of Clovis.
The City of Clovis is a defendant in various lawsuits. Although the outcome of these lawsuits is not
presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not
have a material adverse effect on the financial condition of the City.
NOTE 14 – Deficit Fund Balances, Excess of Expenditures Over Appropriations and Designated
cash appropriation in excess of available balances
Generally accepted accounting principles require disclosures of certain information concerning individual
funds including:
Deficit fund balances of individual funds:
None
Excess of expenditures over appropriations:
None
Designated cash appropriation in excess of available balances. The following funds exceeded approved
budgetary authority for the year ended June 30, 2011:
None
NOTE 15 – Landfill Closure and Post-closure Care
State and federal laws and regulations require that the City of Clovis place a final cover on its landfill
when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years
after closure of the landfill site. In addition to operating expenses related to current activities of the
landfill, an expense provision and related liability are being recognized based on the future closure and
post-closure care costs that will be incurred near or after the date the landfill no longer accepts waste.
The recognition of these landfill closure and post-closure care costs is based on the amount of the landfill
used during the year. The total estimated liability for landfill closure costs is $2,447,480 as of June 30,
2011, which is based on the cumulative capacity to date as a percentage of projected capacity at the time of
landfill closure. This represents an increase of $80,600 from the prior year. It is estimated that an
additional $672,520 will be recognized as closure and post-closure care costs between the balance sheet
date and the date the landfill site is expected to close in accordance with State of New Mexico
Environmental Division and Federal EPA regulations. Approximately 89.86% of the landfill capacity has
been used to date and the estimated remaining landfill life is four years. The estimated total current cost
of the landfill closure and post-closure care of $3,120,000 is based on the amount that would be paid if all
equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of
June 30, 2011. However, the actual cost of closure and post-closure care may be higher due to inflation,
45
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
changes in technology, or changes in state and federal landfill laws and regulations. The City of Clovis is
required by the State of New Mexico Environmental Regulation Board to demonstrate financial assurance
for the closure and post-closure costs. The City of Clovis obtained permanent financing from the NM
Finance Authority for landfill expansion, closure, and post-closure care. The agreement establishes terms
for use of the proceeds, and repayment of amounts loaned that are more fully discussed in Note 7. In
addition, the City has designated funds totaling $2,001,589 to offset the future estimated post-closure
liability amounts.
NOTE 16 – Leases in the Financial Statements of Lessors
Operating leases arise from the leasing of the City’s land and buildings to customers in varying industries
in Clovis. Initial lease terms generally range from 12 to 120 months. Leases are cancellable by the Lessee
with 30-120 days’ notice as defined by the lease agreement. Depreciation expense for assets subject to
operating leases is provided primarily on the straight-line method over the term of the lease in amounts
necessary to reduce the carrying amount of the asset to its estimated residual value. Estimated and actual
residual values are reviewed on a regular basis to determine that depreciation amounts are appropriate.
Depreciation expense for the year ended June 30, 2011 related to land and buildings held as rental
property under operating leases is included in depreciation expense of the Airport in the Proprietary
Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets. Historical cost and
accumulated depreciation as of June 30, 2011 related to land and buildings held as rental property under
operating leases is included in property, plant and equipment of the Airport in the Proprietary Funds
Statement of Net Assets.
NOTE 17–Operating Leases
The reporting entity has entered into a number of operating leases, which contain cancellation provisions
and are subject to annual appropriations. The rent expenditures for these leases were primarily from the
General Fund. Future minimum lease payments are:
Fiscal Year
Ending June 30,
2012
2013
2014
2015
2016
$
$
Amount
287,174
334,067
141,526
69,800
832,567
Lease expenditures for the year ended June 30, 2011 were approximately $567,664.
NOTE 18 – Commitments
Commitments for engineering and construction projects relating to construction or major repairs in
progress aggregated approximately $7,894,451 as of June 30, 2011. The estimated total cost of the
projects is $16,932,718 and as of the year ended June 30, 2011, the percentage of completion of the
existing projects varies. These projects will be paid in future periods as work is performed. Payment will
be made with proceeds remaining from past bond issues, operating revenues, and future grants to be
received.
NOTE 19 – Restricted Net Assets
The government-wide statement of net assets reports $15,842,559 of restricted assets, all of which is
restricted by enabling legislation. For descriptions of the related enabling legislation for special revenue,
debt service and capital project funds, see schedules in the supplementary information section of this
report.
46
STATE OF NEW MEXICO
CITY OF CLOVIS
Notes to Financial Statements
For the Year Ended June 30, 2011
NOTE 20 – Surety Bonds
The City maintains surety bonds for the following employees in the amounts of coverage listed below:
Employee Position
Finance
Director/City
Clerk
$
Coverage
50,000
NOTE 21 – Subsequent Events
As per the agreement for the creation of the Eastern New Mexico Water Utility Authority (Authority), the City
transferred all funds held in the ENMRWA fund (major special revenue fund) as identified in the Governmental
Funds Balance Sheet as of July 1, 2011. At that time all assets/liabilities were transferred to the Authority and the
City no longer held administrative control over the funds.
47
APPENDIX B
FORM OF BOND COUNSEL OPINION
October ____, 2012
[$9,000,000]
City of Clovis, New Mexico
Gross Receipts Tax Improvement Revenue Bonds, Series 2012
Ladies and Gentlemen:
We have acted as bond counsel to the City of Clovis, New Mexico (the "City") in connection with the
issuance and sale by the City of its [$9,000,000] Gross Receipts Tax Improvement Revenue Bonds, Series
2012 (the "Bonds"). The Bonds are issued pursuant to the Constitution and laws of the State of New Mexico
(the "State") and Ordinance No. 1985-2012 and adopted by the City Commission on August 16, 2012, as
supplemented by Resolution No. __ adopted by the City Commission on September 20, 2012 (collectively,
the "Bond Ordinance"). Except as expressly defined herein, capitalized terms used herein have the same
meanings as such terms have in the Bond Ordinance.
We have examined those portions of the Constitution and the laws of the State and the United States
of America relevant to the opinions herein, a certified transcript of proceedings of the Council, the governing
body of the City (the "Transcript"), and other proceedings and documents relevant to the authorization and
issuance by the City of the Bonds, including the form of the Bonds in the Bond Ordinance. As to the
questions of fact material to our opinion, we have relied upon the Transcript and other representations and
certifications of public officials furnished to us, without undertaking to verify the same by independent
investigation.
Based upon the foregoing, and subject to the assumptions and qualifications set forth below, we are of
the opinion that, under existing law on the date of this opinion:
1.
The Bonds constitute valid and binding special, limited obligations of the City under and in
accordance with the Bond Ordinance.
2.
The Bond Ordinance has been duly authorized, executed and delivered by the City and the
provisions of the Bond Ordinance are valid and binding on the City.
3.
As more fully described in the Bond Ordinance, Bonds are payable as to principal and
interest, solely from, and are secured by a first lien pledge (but not an exclusive first lien pledge) of Pledged
Revenues of the City. The owners of the Bonds have no right to have property taxes levied by the City for the
payment of principal and interest on the Bonds and the Bonds do not represent or constitute a debt or pledge
of, or a charge against, the general credit of the City.
4.
The Bond Ordinance creates the lien on the Pledged Revenues that it purports to create.
5.
Under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is
excludable from gross income for federal income tax purposes. We are also of the opinion that interest on the
Bonds is not a specific preference item for purposes of the alternative minimum tax provisions contained in
the Internal Revenue Code of 1986, as amended (the “Code”); however, such interest on the Bonds will be
included in the adjusted current earnings of certain corporations. Although we are of the opinion that interest
B-1
on the Bonds is excludable from gross income for federal income tax purposes, the accrual or receipt of
interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of
these other tax consequences will depend upon the recipient’s particular tax status or other items of income or
deduction. We express no opinion regarding any such consequences.
6.
The Bonds and the income from the Bonds are exempt from all taxation by the State or any
political subdivision of the State.
The opinions set forth above in Paragraph 5 above are subject to continuing compliance by the City
with covenants regarding federal tax law contained in the Bond Ordinance and the proceedings and other
documents relevant to the issuance by the City of the Bonds. Failure to comply with these covenants may
result in interest on the Bonds being included in gross income retroactive to their date of issuance.
The opinions expressed herein are based upon existing legislation as of the date of issuance and
delivery of the Bonds, and we express no opinion as of any date subsequent thereto or with respect to any
pending legislation.
The obligations of the City related to the Bonds are subject to the reasonable exercise in the future by
the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the
exercise by the United States of the powers (including bankruptcy powers) delegated to it by the United States
Constitution. The obligations of the City and the security provided therefor, as contained in the Bond
Ordinance, may be subject to general principles of equity which permit the exercise of judicial discretion and
are subject to the provisions of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect.
The foregoing opinions represent our legal judgment based upon a review of existing legal authorities
that we deem relevant to render such opinions and are not a guarantee of result.
As bond counsel, we are passing upon only those matters set forth in this opinion and are not passing
upon the accuracy or completeness of any statement made in connection with any sale of the Bonds or upon
any tax consequences arising from the receipt or accrual of interest on, or the ownership of, the Bonds except
those specifically addressed in Paragraphs 5 and 6 above.
Respectfully submitted,
B-2
APPENDIX C
NOTICE OF SALE
$9,000,000
CITY OF CLOVIS, NEW MEXICO
GROSS RECEIPTS TAX IMPROVEMENT REVENUE BONDS,
SERIES 2012
SALE OF BONDS PLACE, TIME AND METHOD FOR BIDS
PUBLIC NOTICE IS HEREBY GIVEN that the City of Clovis, New Mexico (the “City”) will on
Thursday, September 20, 2012, at the hour of 11:00 a.m., Mountain Daylight Time, at the offices of RBC
Capital Markets, LLC, 6301 Uptown Boulevard N.E., Suite 110, Albuquerque, New Mexico 87110, receive
sealed bids and bids received through a certain electronic bidding service and publicly open the same for the
purchase of the City’s Gross Receipts Tax Improvement Revenue Bonds, Series 2012 (the “Bonds”) in the
aggregate principal amount of $9,000,000. Bids may be submitted as a sealed bid or as an electronic bid
using the facilities of PARlTY. Submission of bids is further discussed below.
The City Commission of the City (the “Commission”) will hold a regular meeting at North Annex,
Clovis-Carver Library, 701 N. Main, Clovis, New Mexico, on September 20, 2012, at 5:15 p.m., Mountain
Daylight Time, to award the sale of the Bonds, adopt a sale resolution related thereto and consider any other
matters.
For purposes of the written sealed bids, and bids received through the electronic bidding process, the
time as maintained by PARITY shall constitute the official time.
Bids Delivered to the City
Sealed bids, plainly marked “Bid for Bonds,” should be addressed to “City Manager, City of Clovis,
New Mexico,” and delivered to the City of Clovis, New Mexico, c/o RBC Capital Markets, LLC, 6301
Uptown Boulevard, N.E., Suite 110, Albuquerque, New Mexico 87110, Attention: City Manager, prior to
11:00 a.m., Mountain Daylight Time, on September 20, 2012, the date of the bid opening. Such bids must be
submitted on the Official Bid Form, without alteration or interlineation.
Electronic Bidding Procedures
Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through
the facilities of PARITY. Subscription to i-Deal’s BIDCOMP Competitive Bidding System is required in
order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the
failure of any prospective bidder to subscribe.
An electronic bid made through the facilities of PARlTY shall be deemed an irrevocable offer to
purchase the Bonds on the terms provided in this Notice of Bond Sale, and shall be binding upon the bidder as
if made by a signed, sealed bid delivered to the City. The City and RBC Capital Market, LLC, shall not be
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responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the
use of such facilities being the sole risk of the prospective bidder.
If any provisions of this Notice of Bond Sale shall conflict with information provided by PARITY as
the approved provider of electronic bidding services, this Notice of Bond Sale shall control. Further
information about PARITY, including any fee charged, may be obtained from Dalcomp/Parity, 1359
Broadway, 2nd Floor, New York, New York 10018, attention: Eric Washington (212) 849-5021.
For information purposes only, bidders are requested to state in their electronic bids the true interest
cost to the City, as described under “BASIS OF AWARD” below. All electronic bids shall be deemed to
incorporate the provisions of this Notice of Bond Sale and the Official Bid Form.
THE BONDS
Said Bonds will be dated the date of their initial delivery, will be issued as fully registered bonds in
the denomination of $5,000.00 each or any integral multiple thereof. The Bonds will be issued in book-entryonly form through the facilities of The Depository Trust Company, New York, New York and beneficial
owners will not receive physical delivery of Bond certificates. The Bonds will mature on June 1 in each of
the years and in the principal amounts as follows:
Year
Principal
Amount
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
$1,260,000
1,225,000
1,270,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
405,000
Interest
Rate
Both principal and interest on the Bonds will be payable in lawful money of the United States of
America, and the principal and interest of each bond will be payable by the paying agent/registrar for the
Bonds. Such payments will then be distributed to the participating members thereof and by such participating
members to the beneficial owners of the Bonds. The Bonds are limited, special obligations of the City
payable from and equally and ratably secured solely by a first lien on and pledge of the monthly gross receipts
tax revenues from the State of New Mexico, through the Department of Taxation and Revenue, equal to one
and two hundred and twenty-five thousandths percent (1.225%) of the gross receipts of persons engaging in
business within the City as determined and adjusted under Section 7-1-6.4 NMSA 1978 and the Gross
Receipts and Compensating Tax Act, Sections 7-9-1 et seq. NMSA 1978 (the “Pledged Revenues”).
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REDEMPTION
Bonds maturing on or after June 1, 2023 may be redeemed prior to their scheduled maturities on June
1, 2022 or on any date thereafter, in whole or in part, at the option of the City, with funds derived from any
available and lawful source, at the redemption price of par, plus accrued interest to the date fixed for
redemption.
INTEREST RATE AND BID LIMITATIONS
Interest on the Bonds will be payable on June 1, 2013, and semi-annually thereafter on June 1 and
December 1 in each year until maturity.
The maximum net effective interest rate permitted on said Bonds is ten percent (10%) and no interest
rate on any maturity of the Bonds may be greater than ten percent (10%) per annum. It is permissible to bid
different or split rates of interest; provided, however, that: (1) no bid shall specify more than one interest rate
for each maturity; (2) each interest rate specified must be stated in a multiple of one-eighth (1/8) or onetwentieth (1/20) of one percent (1%) per annum; and (3) the maximum interest rate specified for any maturity
may exceed the minimum interest rate specified for any other maturity by no more than two percent (__%).
The Bonds will not be sold at a price less than _____% of par (maximum discount of ___% of par). The
Bonds will not be sold at a price greater than ____% of par (maximum premium of __%).
Each bidder is required to submit an unconditional, written and sealed bid on the Official Bid Form or
electronically for all of the bonds specifying the lowest rate or rates of interest and discount or premium, if
any, at which such bidder will purchase such bonds. For informational purposes only, each bidder is requested
to specify the True Interest Cost on the Bonds stated as a nominal annual percentage rate (see “BASIS OF
AWARD” below). Only unconditional bids shall be considered. The Official Bid Form may be obtained from
the City’s Financial Advisor (see “FURTHER INFORMATION” below).
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BASIS OF AWARD
The Bonds will be awarded to the best bidder, considering the interest rate or rates specified and the
premium offered, if any, and subject to the right of the City to reject any and all bids and re-advertise. The
best bid will be determined and will be awarded on the basis of the True Interest Cost of the Bonds (i.e., using
a True Interest Cost method) for each bid received and an award will be made (if any is made) to the
responsible bidder submitting the bid which results in the lowest actuarial yield on the Bonds. “True Interest
Cost” of the Bonds as used herein means that yield which if used to compute the present worth as of the date
of the Bonds of all payments of principal and interest to be made on the Bonds from their date to their
respective maturity dates (as specified in the maturity schedule and without regard to the possible optional
prior redemption of the Bonds), using the interest rates specified in the bid, produces amount equal to the
principal amount of the Bonds plus any premium bid. No adjustment shall be made in such calculation for
accrued interest on the Bonds from their date to the date of delivery thereof Such calculation shall be based on
a 360-day year consisting of twelve thirty day months and a semiannual compounding interval. The purchaser
must pay accrued interest from the date of the Bonds to the date of delivery. The Bonds will not be sold for
less than _____% of par, nor will a premium in excess of ____ percent (___%) of par amount of the Bonds be
acceptable.
The City reserves the privilege of waiving any irregularity or informality in any bid, except
time of filing.
GOOD FAITH DEPOSIT
All bids shall be sealed, except bids received through the PARITY electronic bidding service, and (i)
shall include a good faith deposit of $180,000 in the form of cash, cashier’s or treasurer’s check of, or by
certified check drawn on, a solvent commercial bank or trust company in the United States of America and
payable to “City of Clovis, New Mexico” must accompany any bid or be submitted prior to the submission of
such bid or (ii) not later than 3:30p.m., Mountain Daylight Time, on September 20, 2012, and prior to the
official award of the Bonds, the successful bidder must send an electronic wire transfer to such account as the
City shall specify in immediately available funds a good faith deposit of $180,000. (If such wire transfer is
not received from the successful bidder by 3:30 p.m., Mountain Daylight Time, on September 20, 2012, the
next best bidder may be awarded the Bonds.) No interest on such good faith deposit will accrue to the
successful bidder. The good faith deposit will be applied to the purchase price of the Bonds.
The good faith deposit shall be returned for all non-successful bids or if no bid is accepted. If the
successful bidder shall fail or neglect to complete the purchase of said Bonds within forty-five (45) days
following the acceptance of the bid or within ten (10) days after the bonds are offered for delivery, whichever
is later, the amount of the deposit shall be forfeited to the City as liquidated damages and, in that event, the
City may accept the bid of the one making the next best bid. If all bids are rejected, the City shall re-advertise
said Bonds for sale in the same manner as herein provided for the original advertisement. If there be two or
more equal bids and such bids are the best bids received, the City shall determine which bid shall be accepted.
TIME OF AWARD AND DELIVERY
The City Commission will take action awarding the Bonds or rejecting all bids not later than 24 hours
after the expiration of the time herein prescribed for the receipt of the bids. The issuance and sale of the
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Bonds is subject to the affirmative vote of a majority of all members of the Commission on the sale resolution
authorizing the Bonds. Delivery of the Bonds will be made to the successful bidder through the facilities of
The Depository Trust Company, New York, New York, within 60 days of the acceptance of the bid. If for
any reason delivery cannot be made within 60 days, the successful bidder shall have the right to purchase said
Bonds during the succeeding 30 days upon the same terms, or at the request of the successful bidder, during
said succeeding 30 days, the good faith deposit will be returned and such bidder shall be relieved of any
further obligation. The successful bidder shall make final payment for the Bonds with Federal Reserve Funds
or other funds acceptable to the City for immediate and unconditional credit to the account of the City. It is
anticipated that the delivery of the Bonds will be on or about October 3, 2012.
FURTHER INFORMATION
Information concerning the Bonds, information regarding electronic bidding procedures, bid
submission and other matters relating to the Bonds, including printed copies of this Notice of Bond Sale, the
Official Bid Form, and the Preliminary Official Statement (the “Preliminary Official Statement”) related to
the Bonds may be obtained from the City’s Financial Advisor, RBC Capital Markets, LLC, 6301 Uptown
Boulevard, N.E., Suite 110, Albuquerque, New Mexico 87110. This Notice of Bond Sale, the Official Bid
Form and the Preliminary Official Statement is available for viewing in electronic format at www.idealprospectus.com. The City has prepared the accompanying Preliminary Official Statement for
dissemination to potential purchasers of the Bonds, but will not prepare any other document or version for
such purpose except as described below. In addition, for any NASD registered broker-dealers or dealer banks
with The Depository Trust Company clearing arrangements who bid on the Bonds are advised that they may
either: (a) print out a copy of the Preliminary Official Statement on their own printer or (b) at any time prior
to the sale date elect to receive a photocopy of the Preliminary Official Statement in the mail by requesting it
from the City’s Financial Advisor. All bidders must review the Preliminary Official Statement and, by
submitting a bid for the Bonds, each bidder certifies that such bidder has done so prior to participating in the
bidding.
The City will agree in the ordinance authorizing the Bonds to provide certain periodic information
and notices of material events in accordance with the Securities and Exchange Commission Rule 15c2-12, as
described in the Official Statement under “Continuing Disclosure of Information.” The purchaser’s
obligation to accept and pay for the Bonds is conditioned upon the delivery to the purchaser or its agent of a
certified copy of the ordinance authorizing the Bonds containing the agreement described under such heading.
The Preliminary Official Statement is deemed final by the City for purposes of Securities and
Exchange Commission Rule 15c2-12(b)(1) except for the omission of the following information: the offering
price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity,
delivery dates, any other terms or provisions required by an issuer of such securities to be specified in the
winning bid, ratings, other terms of the securities depending on such matters and the identity of the purchaser
of the Bonds. The City will furnish to the successful bidder or bidders, acting through a designated senior
representative, in accordance with instructions received from such successful bidder(s) in order to comply
with the Rule, within seven (7) business days from the sale date an aggregate of 50 copies of the final Official
Statement, reflecting interest rates and other terms relating to the initial reoffering of the Bonds. The cost of
preparation of the final Official Statement shall be borne by the City, except the cost of any final Official
Statements in excess of the number specified above shall be borne by the successful bidder(s).
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At the time of payment for and initial delivery of the Bonds, the City will execute and deliver to the
purchaser of the Bonds a certificate in the form set forth in the Preliminary Official Statement.
LEGAL OPINIONS AND TRANSCRIPT
The legality of the Bonds will be approved by Modrall, Sperling, Roehl, Harris & Sisk, P.A. (“Bond
Counsel”), whose opinions approving the legality of the Bonds will be furnished to the successful bidder at no
cost to the successful bidder. The opinions will state in substance that the issue of the Bonds in the amount
aforesaid is valid and legally binding upon the City, payable from and equally and ratably secured solely by a
first lien on and pledge of the Pledged Revenues and that interest on the Bonds is excludable from gross
income for purposes of federal income tax, all as described in the Preliminary Official Statement. The
successful bidder (without cost to such bidder) will also be furnished with a complete transcript of the legal
proceedings, including a no-litigation certificate which will state that no litigation is pending to the
knowledge of the signer or signers thereof as of the date of the delivery of the Bonds affecting their validity or
pledge of the Pledged Revenues for their payment.
CERTIFICATION OF ISSUE PRICE
In order to provide the District with information required to enable it to comply with certain
conditions of the Internal Revenue Code of 1986, as amended, relating to the exemption of interest on the
Bonds from the gross income of their owners, the successful bidder will be required to complete, execute, and
deliver to the City (on or before the date of delivery of the Bonds) a certification as to the “issue price” of the
Bonds substantially in the form accompanying this Notice of Bond Sale. In the event the successful bidder
will not re-offer the Bonds for sale or is unable to sell a substantial amount of the Bonds of any maturity by
the date of delivery, such certificate may be modified in a manner approved by the City and Modrall,
Sperling, Roehl, Harris & Sisk, P.A. Each bidder, by submitting its bid, agrees to complete, execute, and
deliver such a certificate by the date of delivery of the Bonds, if its bid is accepted by the City. It will be the
responsibility of the successful bidder to institute such syndicate reporting requirements, to make such
investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with
reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. In no
event will the City fail to deliver the Bonds as a result of the successful bidder’s inability to sell a substantial
amount of the Bonds at a particular price prior to delivery.
CERTIFICATION OF OFFICIAL STATEMENT
At the time of payment for and delivery of the Bonds, the successful bidder will be furnished a
certificate, executed by proper officers of the City, acting in their official capacity, to the effect that to the best
of their knowledge and belief: (a) the descriptions and statements of or pertaining to City contained in the
Official Statement, and any addenda, supplement or amendment thereto, on the date of the Official Statement,
on the date of sale of the Bonds and the acceptance of the bids therefor, and on the date of the delivery, were
and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial
affairs, are concerned, the Official Statement did not and does not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and
statements, including financial data, of or pertaining to entities, other than the City, and their activities
contained in such Official Statement are concerned, such statements and data have been obtained from
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sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any
material respect; and (d) there has been no material adverse change in the financial condition of City since the
date of the last audited financial statements of the City.
CUSIP NUMBERS
CUSIP identification numbers may be typed or printed on the Bonds, but neither the failure to provide
such number on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the
purchaser thereof to accept delivery of and to pay for the Bonds in accordance with the terms hereof. All
expenses in relation to the CUSIP Service charge for the assignment of said numbers will be the responsibility
of and will be paid for by the purchaser.
BLUE SKY LAWS
The City has not investigated the eligibility of any institution or person to purchase or participate in
the underwriting of the Bonds under any applicable legal investment, insurance, banking or other laws.
By submitting a bid, the initial purchaser represents that the sale of the Bonds in states other than the
state of New Mexico will be made only under exemptions from registration or, wherever necessary, the initial
purchaser will register such Bonds in accordance with the securities laws of the state in which the Bonds are
offered or sold. The City agrees to cooperate with the initial purchaser, at the initial purchaser’s written
request and expense, in registering the Bonds or obtaining an exemption from registration in any state where
such action is necessary but will not consent to service of process in any such jurisdiction.
Dated at Clovis, New Mexico, this 16th day of August, 2012.
Mayor
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REQUIRED BID FORMS- PROPOSAL TO PURCHASE
OFFICIAL BID FORM
City of Clovis, New Mexico
c/o RBC Capital Markets, LLC
6301 Uptown Boulevard, N.E., Suite 110
Albuquerque, New Mexico 87110
Attention: City Manager
Members of the Board:
Pursuant to your “Notice of Bond Sale,” dated August 16, 2012, relating to the City of Clovis, New
Mexico (the “City”) Gross Receipts Tax Improvement Revenue Bonds, Series 2012 (the “Bonds”) in the
principal amount of $9,000,000, which by reference is made a part hereof, we submit the following bid:
For your legally issued Bonds as described in said Notice of Bond Sale, we will pay you par, plus
accrued interest, if any, from the date of the Bonds to the date of delivery to us, *plus a cash premium* *less a
discount* of $_________________ (complete as appropriate) (the maximum permitted premium is ___% of
par and the maximum permitted discount is ____% of par), provided the Bonds bear interest per annum as
follows (the Bonds mature on June 1 of each year):
Year
Principal
Amount
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
$1,260,000
1,225,000
1,270,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
405,000
Interest
Rate
The undersigned has (i) provided *cash*,* a cashier’s or treasurer’s check of *, * a certified check
drawn on _______________*, *a solvent commercial bank or trust company in the United States of
America*, made payable to the order of the City of Clovis, New Mexico, in the amount of $180,000 or (ii)
will, not later than 3:30 p.m., Mountain Daylight Time, on September 20, 2012, and prior to the official award
of the Bonds, send an electronic wire transfer to such account as the City shall specify in immediately
available funds a good faith deposit of $180,000. Such deposit represents our good faith deposit and is
submitted in accordance with the terms set forth in the Notice of Bond Sale. We will pay the CUSIP Service
Bureau charge, if any, for the assignment of CUSIP numbers.
Bid Form Page 1
The undersigned agrees to complete, execute and deliver to the District, by the date of delivery of the
Bonds, a certificate relating to the “issue price” of the Bonds in the form attached to the Notice of Bond Sale.
We understand and agree that no more than 50 copies of the final Official Statement, including any
amendments or supplements thereto, will be supplied to us at the City’s expense and that any additional
copies requested will be subject to a charge to us. By accepting this bid, you agree to provide such copies of
the final Official Statement and of any amendments or supplements thereto in accordance with the Notice of
Bond Sale, and you undertake your other obligations described therein, as contemplated by Rule 15c2-12 of
the Securities and Exchange Commission.
Respectfully submitted,
By:
Authorized Representative
*(Strike inapplicable words)
For informational purposes only, our calculation of the True Interest Cost is as follows:
True Interest Cost: (stated as a nominal annual percentage)
%
Additionally, for information purposes only, the following is requested:
Gross Interest Cost:
$
Bond Insurance (if any)
At Cost of Bidder:
Less Premium Bid:
$
Insurance Premium: $
Net Interest Cost:
$
Additional Rating (if any)
At Cost of Bidder:
(Name of Company)
(Name of Company)
Bid Form Page 2
ACCEPTANCE CLAUSE
The above bid is hereby in all things accepted by City of Clovis, New Mexico, this 20th day of
September, 2012.
Mayor,
City of Clovis, New Mexico
City Clerk,
City of Clovis, New Mexico
RETURN OF GOOD FAITH DEPOSIT
Return of good faith deposit to us as an unsuccessful bidder on this September ___, 2012, is hereby
acknowledged.
Bidder
By:
Bid Form Page 3
CERTIFICATE OF ISSUE PRICE
The undersigned hereby certifies as follows with respect to the bid and purchase of the City of Clovis,
New Mexico Gross Receipts Tax Improvement Revenue Bonds, Series 2012 (the “Bonds”):
1.
The undersigned is the duly authorized representative of the purchaser (the “Purchaser”) of
the Bonds from the City of Clovis, New Mexico (the “Issuer”).
2.
All of the Bonds have been offered to members of the public in a bona fide initial offering.
For purposes of this Certificate, the term “public” does not include any bond houses, brokers, dealers, and
similar persons or organizations acting in the capacity of underwriters or wholesalers (including the Purchaser
or members of the selling group or persons that are related to, or controlled by, or are acting on behalf of or as
agents for the undersigned or members of the selling group).
3.
Each maturity of the Bonds was offered to the public at a price which, on the date of such
offering, was reasonably expected by the Purchaser to be equal to the fair market value of such maturity.
4.
Other than the obligations set forth in paragraph 5 hereof (the “Retained Maturity” or
“Retained Maturities”), the first price/yield at which a substantial amount (i.e., at least ten (10) percent) of the
principal amount of each maturity of the Bonds was sold to the public is set forth below.
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Principal
Amount
Interest
Rate
$1,260,000
1,225,000
1,270,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
440,000
405,000
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
5.
In the case of the Retained Maturities, the Purchaser reasonably expected on the offering date
to sell a substantial amount (i.e., at least ten (10) percent) of each Retained Maturity at the initial offering
price/yield as set forth below:
6.
Please choose the appropriate statement:
( )
The Purchaser will not purchase bond insurance for the Bonds.
Bid Form Page 4
( )
The Purchaser will purchase bond insurance from ________________ (the “Insurer)
for a fee/premium of $_____________ (the “Fee”). The Fee is a reasonable amount payable
solely for the transfer of credit risk for the payment of debt service on the Bonds and does
not include any amount payable for a cost other than such guarantee, e.g., a credit rating or
legal fees. The Purchaser represents that the present value of the Fee for each obligation
constituting the Bonds to which such Fee is properly allocated and which are insured thereby
is less than the present value of the interest reasonably expected to be saved as a result of the
insurance on each obligation constituting the Bonds. The Fee has been paid to a person who
is not exempt from federal income taxation and who is not a user or related to the user of any
proceeds of the Bonds. In determining present value for this purpose, the yield of the Bonds
(determined with regard to the payment of the guarantee fee) has been used as the discount
rate. No portion of the Fee is refundable upon redemption of any of the Bonds in an amount
which would exceed the portion of such Fee that has not been earned.
7.
The Purchaser understands that the statements made herein will be relied upon, by the Issuer
in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, and by Bond
Counsel in rendering their opinion that the interest on the Bonds is excludable from the gross income of the
owners thereof.
EXECUTED and DELIVERED this ____ day of _____________, 2012.
Purchaser
By:
Title:
Bid Form Page 5
APPENDIX D
FORM OF
CONTINUING DISCLOSURE UNDERTAKING
Section 1. Recitals. This Continuing Disclosure Undertaking (this “Undertaking”) is
executed and delivered by the City of Clovis, New Mexico (the “City”) in connection with the
issuance by the City of $9,000,000 City of Clovis, New Mexico Gross Receipts Tax
Improvement Revenue Bonds, Series 2012 (the “Bonds”). The Bonds are being issued pursuant
to the Ordinance No. 1985-2012 adopted by the City on August 16, 2012, as amended and
supplemented by Resolution No. ___ adopted by the City on September 20, 2012 (collectively,
the “Ordinance”). In order to allow the underwriters of the Bonds to comply with the Rule
(defined below), the City is required to make certain continuing disclosure undertakings for the
benefit of owners (including beneficial owners) of the Bonds (the “Owners”). This Undertaking
is intended to satisfy the requirements of the Rule.
Section 2. Definitions.
(a)
“Annual Financial Information” means the financial information (which
will be based on financial statements prepared in accordance with generally accepted accounting
principles, as in effect from time to time (“GAAP”), for governmental units as prescribed by the
Governmental Accounting Standards Board (“GASB”) or operating date with respect to the City)
delivered at least annually pursuant to Sections 3(a) and 3(b), consisting of information of the
type included in the section of the Official Statement entitled “PLEDGED REVENUES.”
Annual Financial Information may, but is not required to, include Audited Financial Statements.
(b)
“Audited Financial Statements” means the City’s annual financial
statements, prepared in accordance with GAAP for governmental units as prescribed from time
to time by GASB, which financial statements have been audited by such auditor as may then be
required or permitted by the laws of the State.
(c)
“EMMA” means the MSRB’s Electronic Municipal Market Access system
located on its website at emma.msrb.org.
(d)
“Event Information” means the information delivered pursuant to
Section 3(d).
(e)
“MSRB” means the Municipal Securities Rulemaking Board. The current
address of the MSRB is 1900 Duke Street, Suite 600, Alexandria, Virginia 22314, telephone
(703) 797-6600, fax (703) 797-6708.
(f)
“Official Statement” means the Official Statement delivered in connection
with the original issue and sale of the Bonds.
(g)
“Report Date” means December 31st of each year, beginning in 2013.
(h)
“Rule” means Rule 15c2-12 promulgated by the SEC under the Securities
Exchange Act of 1934, as amended (17 C.F.R. Part 240, § 240.15c2-12), as the same may be
amended from time to time.
(i)
“SEC” means the Securities and Exchange Commission.
(j)
“State” means the State of New Mexico.
Section 3. Provision of Annual Information and Reporting of Event Information.
(a)
The City, or its designated agent, will provide the Annual Financial
Information for the preceding fiscal year to EMMA on or before each Report Date while the
Bonds are outstanding.
(b)
If Audited Financial Statements are not provided as a part of the Annual
Financial Information, the City, or its designated agent, will provide unaudited financial
statements as part of the Annual Financial Information. In such cases, Audited Financial
Statements will be provided to EMMA when and if available.
(c)
The City, or its designated agent, may provide Annual Financial
Information by specific reference to other documents, including information reports and official
statements relating to other debt issues of the City, which have been submitted to EMMA or filed
with the SEC; provided, however, that if the document so referenced is a "final official
statement" within the meaning of the Rule, such final official statement must also be available
from the MSRB.
(d)
The City, or its designated agent, will provide, to EMMA, notice of any of
the following events with respect to the Bonds in a timely manner not in excess of ten (10)
business days after the occurrence of the event:
(i)
principal and interest payment delinquencies;
(ii)
non-payment related defaults, if material;
(iii)
unscheduled draws on debt service reserves reflecting financial
difficulties;
(iv)
unscheduled draws on credit enhancements reflecting financial
difficulties;
(v)
substitution of credit or liquidity providers, or their failure to
perform;
(vi)
adverse tax opinions, the issuance by the Internal Revenue Service
of proposed or final determinations of taxability, Notices of
Proposed Issue (IRS Form 5701-TEB) or other material notices or
determinations with respect to the tax status of the security, or
other material events affecting the tax status of the security;
(vii)
modifications to rights of security holders, if material;
(viii)
bond calls, if material or tender offers;
(ix)
defeasances;
(x)
release, substitution or sale of property securing repayment of the
securities, if material;
(xi)
rating changes;
(xii)
bankruptcy, insolvency, receivership or a similar event with
respect to the City or an obligated person;
(xiii)
the consummation of a merger, consolidation, or acquisition
involving an obligated person or the sale of all or substantially all
of the assets of the obligated person, other than in the ordinary
course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its
terms, if material; and
(xiv)
appointment of a successor or additional trustee, or a change of
name of a trustee, if material.
(e)
The City, or its designated agent, will provide, to EMMA, notice of any of
the following events with respect to the Bonds in a timely manner not in excess of ten (10)
business days after the occurrence of the event:
(i) failure of the City to timely provide the Annual Financial Information
as specified in Sections 3(a) and 3(b) herein;
(ii) changes in its fiscal year-end; and
(iii) amendment of this Undertaking.
Section 4. Method of Transmission. Unless otherwise required by law and subject to
technical and economic feasibility, the City, or its designated agent, will employ such methods of
electronic or physical information transmission as are requested or recommended from time to
time by EMMA, the MSRB and the SEC.
Section 5. Enforcement. The obligations of the City under this Undertaking are for the
benefit of the Owners. Each Owner is authorized to take action to seek specific performance by
court order to compel the City to comply with its obligations under this Undertaking, which
action will be the exclusive remedy available to it or any other Owner. The City’s breach of its
obligations under this Undertaking will not constitute an event of default under the Ordinance
and none of the rights and remedies provided by the Ordinance will be available to the Owners
with respect to such a breach.
Section 6. Term. The City’s obligations under this Undertaking will be in effect from
and after the issuance and delivery of the Bonds and will extend to the earliest of (i) the date all
principal and interest on the Bonds have been paid or legally defeased pursuant to the terms of
the Ordinance; (ii) the date on which the City is no longer an “obligated person” with respect to
the Bonds within the meaning of the Rule; or (iii) the date on which those portions of the Rule
which require this Undertaking are determined to be invalid or unenforceable by a court of
competent jurisdiction in a non-appealable action, have been repealed retroactively or otherwise
do not apply to the Bonds.
Section 7. Amendments. The City may amend this Undertaking from time to time,
without the consent of any Owner upon the City’s receipt of an opinion of independent counsel
experienced in federal securities laws to the effect that such amendment:
(a)
is made in connection with a change in circumstances that arises from a
change in legal requirements, a change in law, a change in the identity, nature or status of the
City or a change in the availability or character of financial information for the City;
(b)
this Undertaking, as amended, would have complied with the Rule at the
time of the initial issue and sale of the Bonds, after taking into account any amendments or
interpretations of the Rule, as well as any changes in circumstances; and
(c)
the amendment does not materially impair the interests of the Owners.
Any Annual Financial Information containing amended operating data or financial
information will explain, in narrative form, the reasons for the amendment and the impact of the
change in the type of operating data or financial information being provided. If an amendment
changes the accounting principles to be followed in preparing financial statements, the Annual
Financial Information and Audited Financial Statements for the year in which the change is made
will present a comparison between the financial statements or information prepared on the basis
of the new accounting principles and those prepared on the basis of the former accounting
principles.
Section 8. Beneficiaries. This Undertaking binds and inures to the sole benefit of the
City and the Owners, and creates no rights in any other person or entity.
Section 9. Special Funds. This Undertaking is subject to the availability of necessary
funds from annual Pledged Revenues (as defined by the Ordinance).
Section 10. Governing Law. This Undertaking is governed by and is to be construed in
accordance with the law of the State.
Date: October __, 2012
CITY OF CLOVIS, NEW MEXICO
By
Mayor
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